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It all started when greed for money overpowered the sense of understanding money. The US investment banks in their overwhelming desire to have more and more money lent easy loans to sub-prime borrowers. Sub prime borrowers are those who capability to repay the loan is uncertain. Subsequently, all Americans - capable and incapable- was now privileged to be a loanee. Evey American now had a home, spent the money he didn't have; all on the loan amount. and like they say too much of anything is too bad, so was in this case. The sub prime borrowers couldn't return the loan to the lender banks, which forced the banks to seize the borrower's mortgaged property. But of no avail. the banks found no buyers to the confiscated properties. eventually, everything got blocked as properties which resulted in no flow of money - credit (money) crisis.
What's amusing is that the concept was followed by almost all the banks across the globe. However, our Indian government banks are known for its conservative nature ( someone who has approached an Indian bank would only know this). Yet, the Indian stock exchange suffered a great loss as foreign investors withdrew their invested amount from the stock exchange. This imbalance use of money led to having 'no money' in the market and this whole process came to be termed 'economic meltdown', which till date is melting many sectors.