The Financial Crisis One Year on
collapse was not entirely unexpected. The implosion of the US housing market over the past year had already exposed the massive fragilities in the global financial system, with institutions interlocked in such opaque ways that the full extent of liability was not known even to the most experienced players. In consequence, the summer of 2008 had already witnessed the US Federal Reserve bailing out several major financial institutions, beginning with providing a dowry for the failing bank Bear Stearns in its shotgun marriage with JP Morgan, and then going on to protect and then effectively nationalise the mortgage holding agencies Freddie Mac and Fannie Mae. It was well known that many major investment banks and other financial institutions (such as the insurance giant AIG) were all extremely vulnerable, and short-selling by those betting against such institutions only hastened the likely denouement.
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