When it slipped, I wasn’t aware. Then it slided, and stalled. I still didn’t have any clue, no one informed me. Then one day they said, the economy is toppling and tumbling. And then they said, there is an economic crisis. “The Economic Crisis of 2008 “. The housing bubble burst! The this, the that. Suddenly there was so much activity and action. One question, “Where did the money go?”.
Finally when things looked settled and governments rolled out rescue plans and solutions I got interested in this. I came to know there happens to be such bursts from time to time. I found an answer for that. Now it was time to delve into finance and find the culprits. So, “Where did the money go?”
Money, Money, Money
So I wanted to know who is enjoying the money of the world now. Well, the money never existed. Huh? Yes, we can’t speak in terms of paper and metal. It’s value, that makes it money. So speak of value. The value dropped and resulted in this financial crisis! My friend Arvind (very common name, so nick-name=Froggy) explained me this in HIS OWN WORDS. He boasts of being a part (and parcel) of the Writer’s Club of our College 
. In his words, it is like this.
People take mortgage loans from Banks for building houses.
They build house, but are unable to repay.
Bank now plans to mortgage the house, instead of the cash to be paid.
But unfortunately the VALUE of money goes down.
So Bank is now at LOSS.
Bank got money from Investment Bankers.
Investment Bankers at LOSS.
Investment Banks made of Investors.
Investors LOSE. Try to pull out. Find themselves POOR.
So many Banks affected.
Banks in trouble, Government help expected.
There that was the scenario.
Or was it? (There are several articles out there telling you what happened. I tried reading them, but it is written in business language. Hard to digest. So my style of answer.)
My mom gives me a different account. Look at how it twists.
People take mortgage loans from Banks for building houses. Say like 10 lakhs.
People make house of 1 lakh. Use 9 lakhs for other profits.
They turn defaulters. Due to twisted Bank security policies, they escape.
Now Banks mortgage the house. 9 Lakhs lost.
From here it is the same story.
It trickles down to all other branches of the economy and economies of all other countries, thus making it a Global Economic Crisis.
Now my understanding might also be twisted. Have a different story to tell? The comment box is waiting for you!
