Global Financial Crisis

2008–2012 Global Financial Crisis
The 2008–2012 global financial crisis, also known as the Global Financial Crisis (GFC), late-2000s financial crisis or the second "Great Recession", is consideredby many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in the collapse of large financial institutions, the bailout of banks by national governmentsand downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in numerous evictions, foreclosures and prolonged unemployment. It contributed to the failureof key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a significant decline in economic activity, leading to a severe global economic recession in 2008.
Theimmediate cause or trigger of the crisis was the bursting of the United States housing bubble which peaked in approximately 2005–2006. Already-rising default rates on "subprime" and adjustable ratemortgages (ARM) began to increase quickly thereafter. As banks began to give out more loans to potential home owners, housing prices began to rise.
In the optimistic terms, banks would encourage home ownersto take on considerably high loans in the belief they would be able to pay them back more quickly, overlooking the interest rates. Once the interest rates began to rise in mid 2007, housing pricesdropped significantly. In many states like California, refinancing became increasingly difficult. As a result, the number of foreclosed homes also began to rise.
Steadily decreasing interest ratesbacked by the U.S Federal Reserve from 1982 onward and large inflows of foreign funds created easy credit conditions for a number of years prior to the crisis, fueling a housing construction boom andencouraging debt-financed consumption. The combination of easy credit and money inflow contributed to the United States housing bubble. Loans of various types (e.g., mortgage, credit card, and auto)...