If you, like many don’t understand what just happened, indeed what happened to the world economy over the last year and a bit, I could point you to no better explanation than this. Not too long, not too technical, but covers all the right points.
As a response to the dot.com bust – and the additional panic caused by the World Trade Centre attacks of 2001 – the US and other central banks around the world slashed interest rates.
The aim was to give the wobbly economy a boost.
But as time wore on the cost of borrowing cash remained low. A global property boom created demand which was happily met by all manner of lenders.
As one astute commentator put it – they started lending to people like the characters from the TV show My Name is Earl.
At that point they were always headed for trouble.