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part of the housing and credit booms, the number of financial agreements called mortgage-backed securities (MBS) and collateralized debt obligations (CDO), which derived their value from mortgage payments and housing prices, greatly increased. Such financial innovation enabled institutions and investors around the world to invest in the U.S. housing market. As housing prices declined, major global financial institutions that had borrowed and invested heavily in subprime MBS reported significant losses. USA household debt as a percentage of annual disposable personal income was 127% at the end of 2007, versus 77% in 1990. The following Charts illustrates reasons in support of this.

After all these crisis the U.S government has put forward some regulatory measures that aims at preventing further such situation to arise which has which has far reaching effects affecting other big economies also. Although there have been aftershocks, the financial crisis officially ended in 2008.

By September 2008, average U.S. housing prices had declined by over 20% from their mid-2006 peak. The U.S. Financial Crisis Inquiry Commission reported its findings in January 2011. It concluded that 'the crisis was avoidable and was caused by: Widespread failures in financial regulation, including the Federal Reserve’s failure to stem the tide of toxic mortgages; Dramatic breakdowns in corporate governance including too many financial firms acting recklessly and taking on too much risk; An explosive mix of excessive borrowing and risk by households and Wall Street that put the financial system on a collision course with crisis; Key policy makers ill prepared for the crisis, lacking a full understanding of the financial system they oversaw; and systemic breaches in accountability and ethics at all levels.'

The Spanish Version:

As the U.S market was in a position to get back into rhythm, again came the Spanish financial crisis. The 2008–2009 Spanish financial crises is part of the world economic crisis of 2008. In Spain, the crisis was generated by long term loans (commonly issued for 40 years), the building market crash which included the bankruptcy of major companies, and a particularly severe increase in unemployment, which rose to 13.9% in February 2009. The residential real estate bubble in Spain saw real estate prices rise 201% from 1995 to 2007.[7] € 651,168,000,000 is the current mortgage debt (second quarter 2005) of Spanish families (this debt continues to grow at 25% per year - 2001 through 2005, with 97% of mortgages at variable rate interest). As feared, when the speculative bubble popped Spain became one of the worst affected countries. According to eurostat, over the June 2007-June 2008 period, Spain has been the European country with the sharpest plunge in construction rates.[10] Actual sales over the July 2007-June 2008 period were down an average 25.3% (with the lion's share of the loss arguably happening in the 2008 tract of this period).

Spanish house prices fell for the 12th straight quarter in consecutive three months in 2010 but were about to reach a breakeven as the property market has started to emerge from a slump. Confidence is gradually returning to the Spanish property market as holiday home buyers take advantage of the market. The feeling is that it's finally bottomed out and developers are beginning to start new projects. In some parts of Spain