Editing 2008 Financial Crisis (section)

== Analyzing (Break Down / Analysis) 🔬 ==
Structural insights, comparisons, and root-cause investigation.

=== Comparative analysis ===
* Compared with the '''S&L crisis''' (1980s): far larger global impact.
* Differences from the '''COVID-19 recession''': financial vs. real-economy trigger.
* When securitization works well vs. when risk becomes opaque.

=== Structural insights ===
* Securitization chains obscured who bore final risk.
* Rating agencies’ incentives created misaligned assessments.
* Shadow banking lacked capital buffers of traditional banks.

=== Failure modes & root causes ===
* Over-leveraging by banks and investment firms.
* Flawed rating models assigning AAA to risky assets.
* Rapid rise in adjustable-rate mortgage defaults.
* Systemic interconnectedness amplifying localized shocks.

=== Troubleshooting & observability ===
* Indicators: rising delinquency rates, liquidity freezes, credit-spread spikes.
* Tools: stress-test results, housing-price indices, interbank lending rates (e.g., LIBOR–OIS spread).
* Questions: Where does risk reside? How correlated are asset classes?

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