The global financial crisis, also known as the Great Recession, was a period of economic downturn that affected much of the world in the late 2000s. It was triggered by a crisis in the global banking system, which was caused in part by the widespread practice of issuing risky sub-prime mortgages to borrowers who were unable to repay them.

As the housing market collapsed, the value of mortgage-backed securities (which were held by banks and other financial institutions) plummeted, leading to a wave of defaults and foreclosures. This, in turn, caused a credit crunch as banks became hesitant to lend and investors became wary of risky assets. The crisis spread to other parts of the global financial system, and many economies around the world entered into recession.

The global financial crisis had far-reaching effects, including high levels of unemployment, declining asset prices, and a slowdown in global trade. Governments and central banks took a variety of measures to try to stabilize the financial system and stimulate economic growth, including bailouts of troubled financial institutions, monetary policy easing, and fiscal stimulus. The crisis eventually began to abate in the latter part of 2009, but its effects were still being felt in many parts of the world for several years afterward.

The main cause of the 2008 global financial crisis was the bursting of the US housing bubble, which triggered a cascade of defaults, foreclosures, and financial losses that spread throughout the global financial system.The housing bubble was fuelled by a combination of factors, including low interest rates, lax lending standards, financial innovation, and speculation.

As housing prices rose, lenders offered increasingly risky mortgages to borrowers with poor credit histories or limited ability to repay. These mortgages were then packaged into complex securities and sold to investors around the world, spreading the risk of default throughout the financial system.When the housing bubble burst, many homeowners found themselves underwater on their mortgages, owing more than their homes were worth. As defaults and foreclosures rose, the value of mortgage-backed securities plummeted, causing massive losses for financial institutions and investors.

The crisis was exacerbated by the interconnectedness of the global financial system, as problems in the US housing market quickly spread to other countries and financial markets. This led to a freeze in credit markets, as lenders became reluctant to lend and borrowers found it difficult to access financing.

The 2008 global financial crisis resulted in the worst economic downturn since the Great Depression, with widespread job losses, business closures, and reductions in economic output. It also led to a significant policy response from governments and central banks, including bailouts, stimulus packages, and reforms to financial regulation.