Welcome to Fintastic Females, where we, Kalyani and Rupali, your friendly finance experts, embark on an adventure to explore the mythical island of freedom together. Today on Fintastic Females, we delve into a fascinating topic that has truly transformed the world as we know it—the great financial crisis. As we hear more about the possibility of another crash or recession, it brings back memories of the 2008 crisis and the suffering it caused. People are eager to avoid a similar situation and are drawing comparisons to the events of 2008. So, we want to share with you the exact details of what happened back then and how it relates to our current reality. This topic holds personal significance for both of us. For me, Rupali, it reminds me of my graduation years. I completed my university studies in the UK around 2010, and it was a challenging time to find employment due to the delayed effects of the financial crisis. Many of my fellow graduates struggled to secure jobs, and even Oxford graduates were working in trades like plumbing and carpentry. While there’s nothing wrong with those professions, it was indicative of the widespread difficulty in finding employment during that period. On the other hand, I, Kalyani, had a different experience. I was in my final year of university during the crisis, contemplating whether to start working or pursue further studies. A friend gave me an email address to send my CV, and to my surprise, I received a call from an employer who was excited to meet me, even though they had already completed their recruitment process. I didn’t personally feel the immediate impact of the crisis, as the banks in South Africa, where I was located, were not as severely affected at the time. However, a couple of years later, the banks experienced the repercussions, and I witnessed the loss of benefits for new graduates. Now, let’s delve into the timeline of events surrounding the crisis. We’ll simplify the complex technical aspects and present it as a story to help our listeners follow along. The main characters in this story are the borrower, the bank, and the ultimate lender, typically a large corporation lending to the bank. It all began with cheap lending, as interest rates were exceptionally low, and banks were offering easy financing. There was an abundance of money in the system. Mortgage rates, for example, dropped as low as 1%, below the inflation rate. This led to a surge in demand for housing and real estate, as more people could afford to borrow money and invest in properties. To finance these loans, banks acted as intermediaries between borrowers and ultimate lenders. These ultimate lenders were investing companies seeking to make profits by lending to banks, who would then lend the funds to borrowers. Banks could access these funds easily because the regulatory requirements were lenient, and they created mortgage-backed securities. These securities were pools of mortgages bundled together and sold to the ultimate investors, who relied on the bank’s guarantee without knowing the actual quality of the underlying loans. Some of these mortgages were poorly rated, leading to defaults by borrowers and eventually defaults by banks to the ultimate lenders. The crisis escalated when Lehman Brothers, one of the banks engaged in these practices, collapsed in September 2007. This event shattered confidence in the banking system, triggering a wave of withdrawals and a liquidity crisis. The cash held by banks in these illiquid securities couldn’t be easily converted, further exacerbating fear and anxiety throughout the market. In the aftermath of the crisis, there was a renewed focus on financial literacy and education. People became more aware of the risks and pitfalls in the financial system, empowering themselves to make informed decisions. The crisis sparked a wave of innovation, as entrepreneurs and visionaries sought to create more transparent and inclusive financial solutions. Fast forward to the present day, and we find ourselves standing on the precipice of a new era. The lessons learned from the past have shaped a more resilient and accountable financial system. While challenges and uncertainties remain, there is hope and determination to build a future where financial stability and prosperity are accessible to all. As we conclude this episode of Fintastic Females, we invite you to join us on this journey of financial exploration and empowerment. Let’s continue to learn, grow, and support one another as we navigate the ever-changing landscape of finance and strive for a brighter, more inclusive future. Remember, together, we can overcome any financial obstacle and unlock our true potential. Stay tuned for more empowering discussions and inspiring stories on Fintastic Females.