This preview shows page 1. Sign up to view the full content.
Unformatted text preview: investments held by banks and other financial institutions in the United States and abroad. • Confidence erodes Financial institutions became increasingly worried about the viability of other financial institutions, which made it very difficult for those institutions to obtain short-term funding. • Financial markets panic Following the failure of investment banking giant Lehman Brothers, markets for short-term funding broke down altogether, igniting global financial panic. How did the financial crisis threaten Main Street? Massive losses caused banks to tighten lending and the stock market to crash, sending the economy into a tailspin. • Credit crunch Credit became more expensive and harder to come by. • Plummeting wealth The housing and stock market crashes wiped out over 25 percent of household net worth. • Recession The combination of the credit crunch and plummeting wealth sent the global economy into one of the worst recessions since the 1930s....
View Full Document
This note was uploaded on 08/13/2010 for the course ECON ECON 222 taught by Professor Jones during the Spring '10 term at Cal Poly.
- Spring '10