Global Financial Crisis
The crisis could cost 51 million people their jobs in 2009
Terms You Need To Know
Subprime Mortgage: In 2001, banks began granting more loans to risky borrowers. These subprime loans tripled by 2006, totaling 20% of the mortgage market.
Mortgage-Backed Security: The mortgages were packaged into securities and sold to investors, who expected to collect on the loans. Between 1996 and 2007, the number of mortgage-backed securities issued almost tripled, totaling $7.3 trillion.
Credit Default Swap: To mitigate risk, investors bought swaps to insure against debt default. These ballooned from $34 trillion in 2007 to $62 trillion in 2008.
Toxic Debt: Many of those loans failed, starting a chain reaction felt around the world. Today’s total amount of toxic debt rests at an estimated $9.3 trillion.
