How did the 2008 financial crisis impact global markets?

The 2008 financial crisis had a catastrophic impact on global markets, leading to massive stock market crashes, a worldwide recession, and a loss of trillions of dollars in economic value. It was triggered by the collapse of Lehman Brothers and the bursting of the U.S. housing bubble, which sent shockwaves across financial systems globally.

1. Stock Market Collapse

Global stock markets suffered extreme losses during the crisis. The Dow Jones Industrial Average fell by over 50%, while India's Sensex dropped nearly 60% from its peak. Investors lost massive wealth as panic selling took over the markets.

• U.S. Markets: S&P 500 fell sharply, wiping out years of gains.
• Indian Markets: Sensex crashed from 21,000 to below 9,000 points.
• European Markets: FTSE, DAX, and CAC indices experienced historic losses.

2. Banking and Financial Crisis

The crisis was primarily caused by excessive lending and risky financial products. Several major banks collapsed, and governments had to intervene with bailout packages.

• Lehman Brothers Collapse: The largest bankruptcy in U.S. history.
• Government Bailouts: The U.S. and European governments rescued banks to prevent economic collapse.
• Liquidity Crunch: Credit froze, making it difficult for businesses and individuals to get loans.

3. Impact on Global Economy

The crisis led to a global recession, rising unemployment, and economic contraction. It also changed how financial markets function today.

• Job Losses: Millions lost their jobs as companies shut down or reduced workforce.
• GDP Decline: Major economies suffered deep contractions in economic growth.
• Regulatory Changes: Stricter banking regulations were introduced worldwide.

The 2008 financial crisis reshaped global markets, forcing economies to adopt stricter regulations and better risk management. While markets eventually recovered, the lessons learned continue to influence investment strategies today.