Fin crisis 0f 2008

This crisis occured when banks stopped lending to each other. this is because institutions started loosing money in CDOs. by isssuing loan to ppl who cannot pay it, banks have lost the money of depositors.So the bank own houses whose prices have gone down. Banks have to write off this as asset prices have gone down. so everuthing is freezed .

1. Irresponsible lending of Banks - leverage
2. People who borrowed money
3. Regulatory authority not able to keep up with new fin instruments

This has blown out to full blown recession

Ways to come out :

1. Stop from foreclosures. Put money in the hands of ppl . stop the losses of banks . buy assets from bank
2. Initiate the spending momentum again by starting to issue credit again
3.