Inside Job

The Financial Crises of 2008

Financial Crises
A situation in which the value offinancialinstitutions or
assets drops rapidly.
In September 2008 bankruptcy of Lehman Brothers and AIG
triggered a global financial crises, which at a cost over $20
trillion, caused millions of people to lose their jobs and
homes.

How Did Financial Crises of 2008

Happened?
It was a result of corrupted politics, regulation, and academia.
It started in USA basically in late 1990s, when the US
government decided to deregulate the financial industry.
Financial Industry became consolidated, only a handful of
banks and financial institutions controlling and running the
whole industry.
FI started giving out huge loans and making risky investments
on their depositors savings.

 Derivatives market was introduced and new very risky and

complicated financial products were created and yet they
were rated AAA.
Credited rating companies were paid millions and billions
for giving these ratings.
Real Estate prices soared.
Warnings made by IMF and various economists and
financial analysts were paid no heed. And no major
investigations were conducted either.

The Result
By 2008 a huge number of borrowers defaulted and the
mortgage industry started collapsing, which resulted in
the collapse of financial institution.
Financial Institutions ran out of money and started
borrowing from Federal Reserve.
The crises also effected the world and by October 2008,
the stock markets had lost $25 trillions of value.