Largest Financial shock in 80 years.
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"The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression," the report says." endquote
http://news.bbc.co.uk/2/hi/business/7338326.stm
The BBC news article is called IMF slashes world growth forecast on april 9th 2008
beginquote:
The greatest risk comes from the still-unfolding events in financial markets (which might lead to) the current credit squeeze mutating into a full-blown credit crunch
IMF World Economic Forecast endquote
I think the lesson for the whole world is that globalisation is creating problems that the world never had to deal with before. The Subprime meltdown was funded mostly be money from outside of the US. The problem in a nutshell was that loan makers and loan sellers could avoid any financial risk at all simply by reselling their loans out of town or out of country. Since the loans they gave were fraudulent in most cases not only the lenders who eventually held the notes became defrauded but also those who received the loans who didn't understand the loans in the first place. There were even cases of lawyers in collusion with origination loan makers lying to the loan buyers buying their houses who were supposed to be representing the loan buyers.
Until regulation is put in place outlawing subprime loans and all these practices, and people at every level are forced to assume some of the potential risks this sort of thing could theoretically happen again and again in the future further jeapordising local and worldwide economies.
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