📉 2008 Global Financial Crisis

Started with risky mortgage lending in the US, triggering a worldwide banking collapse. It led to major bailouts, recessions, and long-term changes in regulation.

“Too big to fail” became a global reality.

The 2008 crisis began in the United States but quickly rippled across the world. For years, banks had been lending aggressively to homebuyers, even those with poor credit, through so-called subprime mortgages. These loans were then packaged into financial products and sold worldwide, spreading risk through the global financial system.

When US house prices began to fall and borrowers started defaulting, the system unraveled. Banks realised the assets they were holding were far riskier than they thought. Major institutions like Lehman Brothers collapsed, triggering panic in financial markets. Stock markets plummeted, unemployment surged, and global trade slowed sharply.

Governments and central banks responded with massive bailouts and stimulus packages. In the UK, the government took over parts of banks like RBS and Lloyds. The crisis also led to long-term reforms - like Basel III banking regulations - and sparked ongoing debates about inequality, austerity, and the role of central banks.

Key lesson: Unregulated finance can create hidden risks that spill over into the real economy, and once confidence is lost, recovery is slow and painful.