Short Stories for Teachers
What were some of the causes of the Global Recession
By:ws
In layman's terms, its was the collapse of the financial institutions.
Financiers were lending out home loans to high-risk borrowers, many of which defaulted on their repayments and lost their homes and were put into immediate debt. If this happens on a large scale, banks begin making huge losses and their cash dries up, so they stop issuing loans (this is significant, since lending money contributes the greatest proportion of their profit). Also if cash dries up, they begin calling in loans from people who borrowed from them, and if these people can't pay they lose their houses and businesses etc.