I love it when you can find an entire summary of a complicated issue in one paragraph that is suitable to put into a history book. Here is one for the subprime mortgage mess and the recession it caused.
Don't have enough money to buy that McMansion? No problem. Countrywide will give you a subprime loan. What do they care? They are just selling it to Bear Stearns or Lehman Brothers -- may they rest in peace -- where it can be wrapped up into a toxic sausage called a C.D.O. And once it's wrapped nice and tight, Moody's, Standard And Poor's or one of the other crooked ratings agencies will bless it with a pristine AAA rating so it can be sold to a European bank or some other sucker overseas stretching for a slightly better yield.
Yup a it can be summed just like this:
1. Homebuyer: "I want a McMansion in Florida or California!"
2. Countrywide: "Sure here's the money. No I don't need to see any paperwork or proof of anything at all. Go ahead and take it. In fact your home loan was approved in 60 seconds!"
3. Lehman Brothers: "Can I buy that loan off of you? I need it to make sausages (CDOs) with it and sell it to gullible folks for big profits."
4. Moody's: "That sausage is 100% grade-AAA. Its safe, wholesome, and tasty as well! Here is the bill for my services Mr. Lehman."
5. Foreign Bank: "I need another 1% yield in my portfolio to get my bonus. Moody's says that Lehman sausages are grade AAA so let's go with them. Also I know that US house prices have gone up every year since the 1950s. They must be a can't lose investment! I'll take 10 pallets worth of those sausages Mr. Lehman."
6. Homebuyer: " I owe $5000 on my mortgage NEXT MONTH? I can't afford that!"
*everything crumbles to dust*
So to sum it up this is what caused the "Great Recession of 2008:"