A crisis so severe, the world financial system is affected

A crisis so severe, the world financial system is affected
Following a period of economic boom, a financial bubble—global in scope—has now burst.

A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. Furthermore, other weaknesses in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail.


John Bird, John Fortune, Subprime Crisis, February 14, 2008
While there are many technical explanations of how the sub-prime mortgage crisis came about, the mainstream British comedians, John Bird and John Fortune, describe the mindset of the investment banking community in this satirical interview, explaining it in a way that sometimes only comedians can.

Together with impressionist Rory Bremner, derivatives (securities derived from other securities) are also explained:


Bremner, Bird, and Fortune, Silly Money: Where did all the money go?, Part 3, November 10, 2008

Bremner, Bird, and Fortune, Silly Money: Where did all the money go?, Part 4, November 10, 2008

The betting of practically anything helped create enormous sums of money out of almost nothing. However, as former US Presidential speech writer, Mark Lange, notes, “because [derivatives are] entirely unregulated and trade on no public exchanges, their originators can deliberately hide their vulnerabilities.”

The extent of the problems has been so severe that some of the world’s largest financial institutions have collapsed. Others have been bought out by their competition at low prices and in other cases, the governments of the wealthiest nations in the world have resorted to extensive bail-out and rescue packages for the remaining large banks and financial institutions.