The collapse of wall street in 2008

Through the eyes of experts and former employees on Wall Street, The Men Who Stole the World examines how a group of powerful executives helped trigger one of the largest global financial crises ever, how they got away with it, and why another crisis may be under way.

financial crisis 2008 explained

It wisely sold them when prices were high. Treasury bonds. In between discussions at the US Treasury, chaired by the increasingly beleaguered Paulson, Alistair Darling was firming up the details of which banks would take how much from the Treasury's bail-out; and negotiating with the Icelandic government about the return of UK consumers' deposits in the banking sector.

2008 financial crisis uk

Mortgages were transformed into ever-riskier investments The salesmen could make these deals without investigating a borrower's fitness or a property's value because the lenders they represented had no intention of keeping the loans. Instead, the situation deteriorated throughout the summer of It meant that when Alistair Darling, in his first Budget, said the UK was well placed to withstand the effects of US turbulence, no one quite believed him. Since then, Republicans in Congress have eliminated some of the financial regulations that were put in place after Policymakers reasoned they could avoid a return to prewar slump conditions so long as the undeveloped lands around cities could fill up with new houses, and the new houses with new appliances, and the new driveways with new cars. By Friday, as haggard-looking finance ministers from the G7 club of wealthy nations flew to Washington, the world's financial system was on the brink of disaster. A series of bankruptcies and mergers followed as skittish investors, seeking safe harbor, pulled their money out of supposedly high-return vehicles. What made the situation even riskier was that Europe, unlike the United States, had no Fed to serve as a stabilizing force in the event of a crisis.

The following day, Blackstone Group, manager of the world's biggest buyout fund, revealed it had suffered a 90 per cent profit drop during its fourth quarter. And then what? We are not there, at least not yet. In September, the treasury announced it would rescue the government-supervised mortgage underwriters almost universally known as Fannie Mae and Freddie Mac.

This is largely because of the central role played by the banks of major capitalist states. Sanders reported in December : "We find limited evidence that substantial deterioration in CMBS [commercial mortgage-backed securities] loan underwriting occurred prior to the crisis.

They knew only that the rating agencies said it was as safe as houses always had been, at least since the Depression. If these accounts had gone bankrupt, business activities and the economy would have ground to a halt.

Senator Jim Bunning of Kentucky called the bailouts "a calamity for our free-market system" and, essentially, "socialism"—albeit the sort of socialism that favored Wall Street, rather than workers.

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The Real Cost of the Financial Crisis