About 10 years ago, Wall St. created something called 'sub prime' mortgages. Designed for people struggling to buy a home, they came with really low interest rates, but after the first couple of years those rates went way up. Now, in recent years American banks have been handing out sub prime mortgages like crazy. No questions asked, no credit history required. At the same time, something else was happening. After the banks approved those mortgages, they sold them to investment companies - who bundled the mortgages and sold them to investors. As long as the housing market was booming, everyone was making money. But here's the thing - the companies got so greedy, they kept giving mortgages to people who couldn't afford them. The housing bubble burst and several million Americans were in trouble. They couldn't afford the high interest rates, they couldn't renegotiate their loans and they lost their homes. Suddenly, some of America's financial giants had billions of dollars in bad debt. Several major banks and investment houses collapsed and panic set in on the stock markets. Then, came the U-S government bailout plan, 700 billion dollars, to try to save other companies from falling apart. Eventually, it got passed but the story doesn't end there. A number of countries in Europe have either had to bail out their banks or promise to guarantee all bank deposits.
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