Why did people lose their jobs if this was just banks giving out more money than they should have ? Aside from people going homeless paying their landlords who did not pay the mortgage, I don’t understand. I’ve watched the films and read the articles but cannot wrap my mind around the terminology.
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it wasn’t just that banks were loaning money to people who could not pay it back
That is debt owed to the banks
What went spectacularly wrong is that those banks then sold those bad debts to other financial markets and institutions. And they told the people buying the debt that these things were cast iron, these people would pay the debt. They even had credit agencies (working on commission for approval) saying yes these people can definitely pay these debts. So many people bought these debts not knowing they were bad
That the debts simply couldn’t be repaid
Now couple that with that the people (bank or other financial institution) who now own the debt also have to pay for stuff. except they can’t because not enough people are able to make the payments they should be getting . All of a sudden many rock solid financial institutions are not liquid. They simply don’t have enough money to cover their commitments
At that point its almost a pyramid structure, waiting to collapse and it wasn’t just the bottom layer left holding the debt, every layer collapsed because the layer below it could not pay their debt, such a catastrophic failure that even the top layers collapsed.
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