human
I'm a bit confused by the current financial crisis. Can you explain it to me?
assistant
The current financial crisis is caused by the collapse of the housing market and the subsequent economic recession that followed. In 2008, the subprime mortgage crisis began when banks started offering mortgages to people with poor credit histories or who had no income. This caused an increase in defaults on loans, which led to a decrease in property values, leading to further defaults and more losses for lenders. Banks were forced to write off billions of dollars worth of bad debts, leading to a decline in liquidity and a decrease in consumer spending. This caused a ripple effect through the economy, leading to a global recession.