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Global Financial Crisis GFC 2007-2010

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Definition of 'Global Financial Crisis GFC 2007-2010'

In 2006 the United States housing bubble peaked and throughout the world this bubble popped and caused a collapse in the housing market. The housing market in the United States from 2003 to 2006 was the largest and most out-of-control bubble seen in any market in the history of the world.

The collapse caused the values of securities tied to real estate pricing to plummet damaging financial institutions globally. Questions regarding bank solvency, declines in credit availability, and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during late 2008 and early 2009.

The caused worldwide economies to slow down as credit tightened and international trade declined. It has been argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products. Governments were criticized for not adjusting their regulatory practices to address 21st century financial markets. Governments and central (federal) banks have responded with unheard of fiscal stimulus, monetary policy expansion, and institutional bailouts.

The liquidity shortfall in the United States banking system triggered the financial crisis. It has resulted in the collapse of large financial institutions, the "bail out" of banks by national governments and downturns in stock markets around the world.

In almost all countries and all parts of each country, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It is considered by many to be the worst financial crisis since the Great Depression of the 1930s.

Key businesses have failed. Consumer wealth has fallen by trillions of United States dollars.

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