Description: This crisis first started with subprime loans and quickly morphed into a credit crisis that eventually engulfed a lot of financial institutions around the world. If a AAA were really a AAA, this crisis would probably have been contained and localized. As the crisis developed, evidence emerged from the shadows that revealed the questionable quality of some AAA-rated MBS or ABS. Subprime loans were the weakest link. As the credit boom came to an end and the economy slowed down further, the Alt-A, prime and credit card loans were also affected. The subprime crisis is only the symptom of a much larger underlying problem. Both consumers and corporations were overleveraged.

Description: Our current financial crisis has wreaked havoc on the credit markets, the stock market and the entire economy. We must remember that the root cause of this crisis is the collapse of the residential housing market, which has been further exacerbated by the continuing downward housing spiral.