From Subprime Mortgages to Global Crisis
In Chapter 1, we learned about the “kerosene-soaked rag”, risky subprime mortgages bundled together and sold as supposedly safe investments. When interest rates rose and homeowners began defaulting, the spark became a global financial fire.
Chapter 2 explores the Lehman Brothers collapse, the AIG bailout and how these events caused a chain reaction that froze the global economy. Understanding this is key to learning about systemic risk, where the failure of one part of a system can bring the whole system down.
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