Why a U.S. Subprime Mortgage Crisis Is Felt Around the World

Comment from the contributor:

While this analysis from the New York Times is a couple of years old, it highlights some of the critical components of the global financial crisis, and how America's mess became the world's.  At the root of a lot of the issues were collateralized debt obligations (C.D.O.), that were repackaged again and again, and all of them connected to bad mortages.

Part of the problem is the fact that these kinds of financial packages have run rampant.  According to J.P. Morgan, there are about $1.5 trillion in global collateralized debt obligations, and about $500 billion to $600 billion in structured-finance C.D.O.’s, which are C.D.O.'s made up of bonds backed by subprime mortgages, slightly safer mortgages, and commercial mortgage backed securities.  To get the full picture, read what NYT has to say.