Term: SUB-PRIME CRISIS

In 2007/8 the property market in America collapsed. Mortgage bonds on tens of thousands of properties had been securitised and sold to banks all over the world. As property owners scrambled to sell, property prices fell even further pushing more owners into financial difficulty. Lehman Bros – a major American bank collapsed and the Federal Reserve Bank had to step in to rescue various major American companies, including General Motors. The Fed injected billions of dollars into the American economy and urged other central banks to do the same. By 2017, the ramifications of the sub-prime crisis were still being felt, although the US economy was gradually recovering.

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