Module 2: Sub-prime Crisis

The current economic turmoil was precipitated by the sub-prime mortgage crisis. From the exploration conducted in Module 1, it is clear the structural flaws in the banking and monetary system underpin the economic problems we face today and have their origins dating back centuries. The sub-prime mortgage market developed as a result of those flaws and was by no means a novel departure from previous practices. We only have to go back as far as the 1980s to see a similar debt problem emerging, the junk bond scandal involving Michael Milken of Drexel Burnham Lambert and Ivan Boesky: Drexel Burnham Lambert's legacy, Stars of the junkyard. The more recent sub-prime

crisis has variously been blamed on the greed and naivety of those on low or no wages who took out the mortgages, the actions of a "few bad apples" working within the financial system, the regulators etc. However, as we've found in our examination of the banking and monetary system, there were structural incentives to obscure the truth about what was really going on within the subprime mortgage market.