Subprimemortgagecrisis refers to the global financial crisis triggered by the bursting of the American real estate bubble, which started in 2007 and worsened in 2008, leading to the collapse of the American real estate market. The following is a brief review of the subprime mortgage crisis:

1. The formation of the real estate bubble:

2/kloc-0 At the beginning of the century, the American economy grew rapidly and the real estate market flourished. In order to pursue profits, many financial institutions and loan companies have launched various innovative loan products, including subprime loans. Sub-prime loans refer to loans provided by lending institutions to borrowers with poor credit records and unstable income, who usually cannot obtain traditional mortgage loans.

As house prices continue to rise, financial institutions believe that even if borrowers cannot repay their loans, they can recover their loans by selling mortgaged properties. In this state of mind, financial institutions relaxed the credit review of borrowers, which led to the rapid expansion of the subprime loan market.

2. Securitization and sub-prime loan bonds:

In order to spread risks, financial institutions package subprime loans into complex financial products, which are called mortgage-backed securities (MBS). These securities are divided into shares with different risk levels and sold to investors. This securitization process enables financial institutions to recover their funds more quickly and further expand the subprime loan market.

However, the complexity of these financial products made it difficult for investors to assess their risks, which laid a hidden danger for the subsequent crisis.

3. Falling house prices and wave of default:

Since 2006, the American real estate market has shown signs of cooling, and house prices have begun to fall. With the decline of house prices, many subprime borrowers find that the value of their houses is lower than the amount of loans owed, forming so-called "negative assets". These borrowers chose to stop repayment, which led to a rapid increase in default rate.

4. Crisis of financial institutions:

With the rising default rate of subprime loans, the value of mortgage-backed securities held by financial institutions has shrunk dramatically, which has triggered a global financial panic. Due to over-investment in these securities, many financial institutions experienced a serious liquidity crisis. Some large financial institutions are even on the verge of bankruptcy, such as Lehman Brothers.

5. Government intervention and economic recession:

In response to the crisis, the US government has taken a series of intervention measures, including injecting capital into financial institutions through the Troubled Asset Relief Program (TARP) and implementing fiscal stimulus plans to boost the economy. However, these measures failed to stop the spread of the financial crisis, and the American economy fell into a serious recession and the unemployment rate soared.

Generally speaking, the root of the subprime mortgage crisis lies in the excessive speculation of financial institutions on the subprime mortgage market and the lack of financial supervision. This crisis has had a profound impact on the global economy, including the European sovereign debt crisis and the devaluation of emerging market currencies. The lessons of the subprime mortgage crisis have also prompted governments and regulators to strengthen supervision over financial markets to prevent similar crises from happening again.