Global Financial Crisis 2008
The 2007–09 global financial crisis was a wholesale-run on securitized credit and dealer balance sheets after US housing turned — the modern template for shadow-bank runs, fire sales, and a central-bank-as-market-maker.
Definition
Subprime and housing were the spark. The system object was runnable liabilities (repo, ABCP, money funds) against opaque, correlated assets, with dealer balance sheets as the hinge. Bear, Lehman, AIG, and the reserve-primary break-the-buck were chapters of one run. Policy was lender, buyer, and guarantor of last resort.
Why it matters
Dodd-Frank, Basel III, CCAR, and the standing-repo debate are all GFC scars. If you do not understand repo and off-balance-sheet conduits, you do not understand 2008.
Case
August 2007 BNP freeze, March 2008 Bear, September 15 Lehman, September 16 AIG and RPF, TARP, and QE1. Cross-border dollar funding required swap lines — a Herstatt-plus-funding event.
How to read it
Map runnable claims, haircut spirals, and who was too interconnected. House prices were the collateral story; the run was the crisis.
Key papers
Landmark references with real publisher or arXiv links — not token-overlap noise.
- Deciphering the Liquidity and Credit Crunch 2007–2008Brunnermeier · 2009 · Journal of Economic PerspectivesThe canonical mechanism paper.
- Slapped by the Invisible HandGorton · 2010 · OxfordThe sale-and-repo / information-insensitive-debt view.