This might be a short article.... It focuses only on how it happened.
It all began in the US. US was booming in the Real Estate sector.., Economists know, when there is a boom, there has to be a Depression... Let me get back to the point. Since Real Estate seemed to be going strong, Banks gave loans without any collateral (which may be any security or assets which one holds) to anyone to come for a loan. And banks thought this land or house individuals bought as a security for the banks.
Now the story changed, many failed to pay back the loan; the banks mortgaged the land… but failed to get even half the amount they lend. This was because there was immense supply of land, but no demand, so the prices came down. Now banks had no assets and this news spread… so everyone who deposited in the banks began mass withdrawal … banks simply ran out of money. Thus banks became bankrupt. Now since the global economy is interconnected this spread like wild fire.
Coming soon: - Impact of Global Economic recession on the Indian Economy
