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Let's set the scene, before 2008, American banks were crazy about offering real estate loans with almost no restrictions. The real estate sector was flourishing and has been growing steadily for many years, so banks were pushing consumers to get loans. And what works best for banks is to offer loans to customers who do not meet all the criteria of the perfect borrower. To put it simply, the bank will explain to the client that the price of real estate continues to rise, and that even if a borrower is going into debt now and that his monthly payments are increasing over the years, the added value that they will get will allow them to repay their loan without much difficulty. And it works, the loans at risk multiply and the system seems to be quite well established. Sometimes, some borrowers can no longer repay and fall into over-indebtedness. But these losses are insignificant when compared to the profits that the banks generate thanks to these loans.
Then one day, in 2007, and for the first time since the end of the Second World War, property prices fell. And then, the subprime system, which was largely based on the growth in prices in the real estate sector, collapsed.
It is this spiral that is characteristic of the subprime crisis. And it is this spiral that is behind the explosion of the mortgage bubble in the United States. And it is this spiral that will have global economic consequences for several years.
But, if this crisis is specific to the United States, why have other countries suffered as well? You are entirely right to ask yourself this question. These subprime loans were only offered by banks in the United States. But, yes there is a but ?? If the consumers were American, it was not necessarily the case for banks. Banks around the world were riding the subprime wave, and they found themselves mired in the crisis.
From 2007 to 2008, losses for banks are estimated at $ 500 billion. Something to shake the world economy and question a whole system put in place by the banks themselves and which is at the origin of one of the biggest bubbles of the century.
The question then arises: can we trust the banks? Are they as interested in the profits they will make as in our ability to repay?
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