After the biggest (in lost value) and longest (in years) housing downturn in history, U.S. property markets are finally beginning to show signs of consistent recovery.
When the subprime mortgage market completely collapsed in 2008, the most significant immediate impact was felt in the credit markets. Most casual investors are not aware of the incredible importance of credit markets in the day-to-day operations of global, developed economies. Banks such as Bank of America, UBS, HSBC, etc., all finance their day-to-day operations by lending to one another in the overnight interbank market. When the subprime market imploded in ’08 and Bear Stearns, Lehman, and Freddie & Fannie all collapsed, banks essentially stopped lending to one another because no one knew who was going to be next in line. Would you want to loan a few hundred million dollars to someone if you didn’t know whether they would be in business the next day?
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