2nd Insurance Article

Today's circumstances have echoes of other big financial crises. They are part of a perennial pattern where excesses, usually monetary, cause a boom, in this case a US housing boom, before they finish off with a bust. Boom and bust in the housing market would predictably impact the financial market, as falling house prices lead to delinquencies and foreclosures.
Events now have many similarities to those of the past, but also a few modern twists. The fallout has been augmented by several complicating factors, including the use of sub-prime mortgages, especially the adjustable type that triggered excessive risk-taking.
That was encouraged in the US by government programmes designed to promote home-ownership - a worthwhile goal at the time, but one that in retrospect may have been long overdone.
In many parts of the world, that basic precept flourished on the back of a prolonged period of cheap money and abnormally low interest rates.
Then, via an elaborate network of derivatives, defaults on mortgages spread to financial institutions in the US and across the globe.
The headlines may have been about the slump in the housing market, but the credit losses at big and well-known banks mattered mainly because of their knock-on impact on the real economy through a virulent credit crunch and collapsing equities market.
That is all well-documented history now.