How much do you know about the financial crisis in the world

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  • It is a dominal effect to the financial world. The financial crisis today started with the sub-prime mortgage. Banks lend money to un-qualified home buyers. When the home buyer could not afford the monthly payment, the mortgage defaulted. So bank has to write off the loss on the loan that is unpaid. When the sub-prime mortgage fall apart, bank is getting to trouble with their earnings. On the other hand, the investment banks put some sub-prime mortgage into their mutual fund portfolio in order to gain higher return. Investment banks lost their holding. That created the bankrupcy of Lehman Brother and merger of Merrill Lynch in just few month after the mortgage crisis. With all the big 5 investment banking clapes on Wall Street, the market crashed. That effect the whole world. Beacuse one wall street job creates the other 3 non-financial jobs.