The Great Recession and Bitcoin

At the time, banks made billions of dollars by bundling together risky mortgages and passing them on to investors in the form of collateralized debt products. These products were extremely popular, in part because prominent ratings agencies were financially incentivized to rate them as quality investments.

The U.S. housing market was booming, fueled by record low interest rates, driving growing demand for subprime mortgage-backed securities.

Inevitably, the housing market stalled as U.S. economic activity began to contract.

Thousands of people who had obtained mortgages without filling out proof of income or making down payments began to default en masse. This led to the bankruptcy of pension funds, commercial banks, and other financial institutions that had invested huge amounts of money in unstable debt products.

Perhaps the most famous example is the bankruptcy of Lehman Brothers, which many consider to be the peak of the financial crisis.

The shockwaves of the crisis swept through global financial markets, triggering a widespread recession. Countless people lost their jobs and homes during the Great Recession. Yet only one American trader was arrested.

Radical change is long overdue.