US mortgage-related assets were financed and distributed through an interconnected financial system before the crisis of 2007–2009. What began with mortgages spread because the financial plumbing was so connected.
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Securitization, leverage, short-term funding and uncertain asset values created channels through which losses could spread. Securitization and short-term borrowing moved risks far beyond individual homes.
Blaming only borrowers lets major institutional incentives off the hook. Weak underwriting mattered, but focusing only on individual borrowers would miss system-wide incentives and institutional decisions.
Housing busts are not automatically global banking crises; the surrounding financing structure determines transmission. Falling property prices don't always create a global meltdown.
Which link turned falling house prices into a breakdown of confidence across financial institutions?