Global Financial Crisis - 10 Years Later, Jill Schlesinger Explains

"We had a crisis that was due to too much borrowing and too much lending"

Money

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PITTSBURGH (Newsradio 1020) - Ten years ago the world was facing the Global Financial Crisis.  

CBS Business Analyst, Jill Schlesinger, joined KDKA Radio on it’s the anniversary to talk about what caused crisis and whether or not the United States has recovered from it.

What caused the financial crisis?

“We usually peg it to the bankruptcy of Lehman Brothers. That started a cascading global financial crisis, but the whole thing started almost a year before that,” Schlesinger tells KDKA Radio.

“We had a crisis that was due to too much borrowing and too much lending around the world. Interest rates were really low, everyone was trying to figure out how to get more interest on their reserves, especially in China.”

When mortgage companies were selling bonds but did not have enough mortgages, what did they do?

“Lend, lend, lend. No matter how bad their credit is, how good their cred it is. You got a heartbeat, you’re going to get a mortgage. We all started borrowing too much, and this happened at every corner of the world,” Schlesinger tells listeners.   

“At the end of the day, all of the over-extended Americans and American debt came back to bite us in the butt.”

Have portfolios recovered?

“Absolutely. Stocks are up 60% inflation-adjusted from 2007,” Schlesinger added.

Has the housing market changed since the financial crisis?

"Median household net worth is still lower than it was in 2007. That is because so many Americans had to invade their savings, retirement accounts, and lost their homes," Schlesinger said.  

“If you really think about this, a decade after this crisis, a typical middle class family's net worth is still more than 40,000 dollars below where it was in 2007.”

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