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When the US sneezes, the world catches a cold Theres a mortgage in my house The crisis began with the burst of the US housing bubble in 2004, after a long period of steadily increasing house prices With subprime lending -unqualified borrowers in 2005-2006, it came time to pay the piper Interest rates on the subprime mortgages shot up In 2007, BREAKING DOWN 'Housing Bubble' • • • • nearly 1.3 million US housing properties were subject to foreclosure activity Mortgage debts become ‘worthless’ debts banks weren’t willing to lend to each other any longer Liquidity risk Other reason of financial crisis 2008 Increasing oil prices Food has become so much more expensive the credit crisis - which was created in the US - can only be solved by the US There is little Europe can but stand by and try to ride out the storm