Financial Crisis Contagion and Systemic Collapse

Prosperity Pulse Decoding Financial Frequencies · Nov 20, 2025 · 11m

When housing prices stopped rising in 2006, subprime borrowers began defaulting in unprecedented numbers, triggering a cascade of failures that nearly destroyed the global financial system. This episode traces the 2008 financial crisis from its origins in housing market collapse through the failure of major financial institutions. We examine the role of interconnections between financial institutions—how the failure of Lehman Brothers created uncertainty about which institutions held toxic mortgage securities and triggered a credit freeze. The episode analyzes the role of credit default swaps…