Housing price declines triggered the 2008 financial crisis

Evidence

In 2006 US housing prices reached a turning point, and their decline began to weigh on the rest of the economy. Household wealth decreased in tandem, leading to lowered consumption and eventually to a series of mortgage non-payments. As the financial system had become increasingly tied to the mortgage market, it was inevitable that the decline in housing prices would wreak havoc on the financial sector. — Nick Srnicek, Platform Capitalism, 31

Categorization

• XREF: connects to: Falling collateral values triggered Bear Stearns’ liquidity crisis. — Mark Blyth, Austerity: The History of a Dangerous…, 83; Correlation assumptions in CDO design collapsed when housing markets proved linked. — Mark Blyth, Austerity: The History of a Dangerous…, 91; The 2008 crisis spread because banks’ liquidity depends on others’ willingness to stay illiquid — Mark Blyth, Austerity: The History of a Dangerous…, 98 (+1 more)

Related

• The 2008 crisis spread because banks’ liquidity depends on others’ willingness to stay illiquid (similarity 0.85)
• Correlation assumptions in CDO design collapsed when housing markets proved linked. (similarity 0.83)
• Falling collateral values triggered Bear Stearns’ liquidity crisis. (similarity 0.83)
• The 2008 subprime crisis confirmed central predictions of financialization studies. (similarity 0.79)

Broader Connections

• Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis #complicates (0.85) — Albert Bandura, Moral Disengagement, 1492