WTF Happened In 2008? Deep Dive Into the Greed-Soaked Financial CrisisThat Broke the World

2008 was one of the biggest financial crisis in modern history, but if you’re under 30, you probably only know it as “that thing that f*cked up the economy before TikTok existed.” Some of you might have even been too young to give a s*ht when it happened—your biggest worry back then was probably whether your Beyblade would outspin your friend’s or to get your hands on the new Lego Star Wars Captain Rex Minifigure while your parents were having a mental breakdown in the living room watching their savings disappear.

But here’s the thing: what happened in ‘08 still effects the economy today. And if you wanna play the markets, you need to understand it. So, let me break it down for you, quick, dirty, and without the sugarcoating. This was a once-in-a-lifetime financial catastrophe, and the reason wasn’t some asteroid strike or alien invasion, it was pure, uncut Wall Street greed mixed with a level of stupidity that should’ve been illegal (and technically was, but nobody cared). Let’s dive in.

2008 Financial Crisis: The economy went boom, people went bust

Alright, now that you know something big happened, let’s talk about just how bad it got. Because this wasn’t just some little hiccup, this was a full-scale economic meltdown that wrecked millions of lives and sent shockwaves across the entire world.

The stock market got absolutely nuked

Picture this: you wake up one day and half your net worth is gone. Poof. Vanished. That’s what happened to millions of investors, companies, and even governments when the stock market crashed by over 50%.

• The S&P 500, which tracks 500 of the biggest companies in the U.S., lost HALF its value between 2007 and early 2009.

• The Dow Jones, that fancy number you see on TV that tells boomers how happy or sad they should feel about the economy, dropped 54% from its peak.

• The housing market, which had been booming like crazy, went into a death spiral, home prices fell nearly 30% nationwide (and even more in some areas).

Unemployment skyrocketed

When a recession hits, companies panic, stop hiring, and start laying people off in droves. And in 2008, businesses weren’t just laying off a few employees here and there, they were shutting down completely.

• 2.6 million jobs were lost in the U.S. in 2008 alone.

• By 2009, one in ten Americans was unemployed.

• Millions of people lost not just their jobs, but their careers, whole industries collapsed.

• The auto industry nearly went extinct. GM and Chrysler were days away from bankruptcy before the government bailed them out.

  
  

If you weren’t rich, this sh*t was a disaster. You went from having a stable job to suddenly wondering if McDonald's was hiring (and surprise, even they were cutting hours).

Pension funds? wiped the f*ck out.

Now, if you’re young, you might not give a sh*t about pensions, but imagine working your whole life, stacking up money for retirement, and then BOOM—it’s all gone because some banker in a suit decided to YOLO a bunch of mortgage-backed securities.

• Pension funds lost TRILLIONS. If you were set to retire in 2008, guess what? You weren’t retiring anymore.

• 401(k)s and IRAs got absolutely obliterated. People who had built their savings for decades saw their investments get cut in half—sometimes worse.

• Retirement accounts that were supposed to be “safe” were actually just Wall Street’s personal casino chips—and they lost.

The housing market went up in flames

Banks had tricked people into taking on more debt than they could handle. So if losing your job wasn’t enough, imagine also losing your house. That’s exactly what happened to millions of peoplewho got suckered into bullsh*t mortgages they were never supposed to afford in the first place.

• At the peak of the crisis, 10 million homes were foreclosed.

• Families were kicked out onto the streets, forced to move in with relatives, or in some cases, literally ended up in tent cities.

• Entire neighborhoods turned into ghost towns because every other house was abandoned.

So you were standing there with no job no retirement fund, no home and literally nothing in one hand, and your d*ck in the other. And you didn't even understand how this could have happened, some still don't so let's break it down.

How the whole house of cards came crashing down

Alright, now that you know how f*cked everything got, let’s break down why it happened. And trust me, this wasn’t some accidental "oopsie" moment—this was pure, unfiltered greed mixed with a level of stupidity that should’ve been illegal. Wall Street built a massive, overleveraged casino, betting on dogsh*t mortgages and assuming the party would never end. Well, guess what? The music stopped, and the whole system collapsed.

Step 1: The great mortgage free-for-all

This all started with the housing market—which, before the crash, was booming harder than a meme stock on crack. Everybody and their grandma was buying houses, prices were skyrocketing, and banks were handing out mortgages like candy. The problem was that they weren’t just giving loans to people who could afford them.

• Enter Subprime Mortgages: Banks started giving out high-risk loans to people who had no business buying a house. No stable income? No savings? Didn’t matter, here’s your mortgage, buddy!

• Adjustable-Rate Mortgages (ARMs): Lenders made these loans look affordable at first, with low introductory rates that spiked massively after a few years, ensuring people would default.

• The Ninja Loans: No Income, No Job, No Assets? No problem! Banks literally didn’t check if borrowers could pay back the loan.

This was a disaster waiting to happen, but banks didn’t care because they weren’t the ones holding the risk. * Hold for intense DUM DUM DUUUUUUUM Music *

Step 2: How banks turned garbage into gold (CDOs & Tranches)

Alright, so banks gave out a f*ckload of bad loans. But instead of keeping them on their books, they found a brilliantly stupid way to dump the risk on investors while still making billions. Enter the key word of this whole them mess:

Collateralized Debt Obligations (CDOs)

one of the most toxic financial products ever created.

Banks took a bunch of these sh*t mortgages, bundled them together, and sold them off to investors like they were low-risk, high-return investments. These CDOs were then sliced up into different "tranches" (French for "layers" but really just means "layers of bullsh*t"). The top tranches got AAA ratings, meaning they were "safe" investments except they weren’t. The lower tranches were pure dogsh*t, but they were repackaged into new CDOs called CDO-squareds—yes, they literally bundled up trash and sold it again. If that sounds insanely reckless, it's because it was. But nobody cared because everyone was making so much money.

Step 3: How rating agencies fueled the scam

Now, you might be thinking, "Wait, wouldn’t investors see how risky these CDOs were?"

Nope. Because the ratings agencies (Moody’s, S&P, Fitch) were in on the scam too.

• They slapped AAA ratings on this garbage because they were being paid by the banks.

• In reality, these "safe" investments were time bombs.

• The whole thing was a Ponzi scheme, but nobody wanted to stop the gravy train.

If You haven't seen "The Big SHort" WATCH IT or at least this scene

Step 4: The insurance that wasn’t (AIG & Credit Default Swaps)

So, investors were buying billions of dollars worth of CDOs, but some of them were smart enough to hedge their bets. Enter AIG (American International Group)—the company that insured these mortgages through Credit Default Swaps (CDS). What's a CDS I hear you ask?

Basically, banks and hedge funds bet on these mortgages failing, and AIG promised to cover the losses. AIG sold trillions of dollars worth of these CDS contracts, without having the money to back them up. When the housing market collapsed, AIG owed more than they could ever pay. They were on the verge of bankruptcy, and the U.S. government had to bail them out for $180 billion just to stop the whole system from imploding.

Step 5: The bubble pops, the housing market crashes

Now, here’s where the whole thing went straight to hell. People started defaulting on their mortgages. Since the loans were bundled into CDOs, those CDOs became worthless. so now it is time for our:

who got f*cked checklist:

✅ The banks holding them? F*cked.

✅AIG, which insured them? F*cked.

✅The investors? F*cked.

✅The entire f*cking financial system? F*cked.

✅Your parents? F*cked.

✅You who asked for that new LEGO set for christmas? F U C K E D

At first, banks tried to pretend everything was fine. Then Lehman Brothers collapsed overnight, followed by Bear sterns and then Merrill Lynch and panic spread like wildfire. These weren’t random startup banks—they had been around for almost a century or more, and in one year, they got obliterated. And just like that, the house of cards fell, wiping out trillions of dollars in wealth, destroying retirement accounts, and sending the entire economy into a freefall.

And What About Fannie & Freddie?

Oh, you thought we were done? Nah, this sh*t ran even deeper.

Fannie Mae and Freddie Mac were government-backed mortgage giants that basically bought mortgages from banksto keep the housing market running. Since the government implicitly backed them, investors assumed they were safe. They loaded up on subprime mortgage garbage, thinking nothing bad could happen. When the market crashed, they were holding TONS of worthless sh*t. In September 2008, the U.S. government had to step in and take them over, or else the entire housing market would have completely collapsed.

So how this could have happened?

In best case it was a scam but more likely it was stupidity, which is even worse. The entire system was built on lies, greed, and a belief that housing prices would “never go down. Banks gave out sh*t mortgages. They packaged them into fancy financial products. Rating agencies lied about how safe they were. AIG insured the whole f*cking thing without having the money to pay up. And everyone got greedy and by everyone I really mean everyone.  so now it is time for our:

who got greedy checklist:

✅ The banks selling? Greedy

✅AIG, which insured them? Greedy

✅The investors? Greedy

✅The entire f*cking financial system? Greedy

✅Your parents? Greedy

✅You who asked for that new LEGO set for christmas? G R E E D Y

Some of you might not understand why I call everyone greedy. So listen, yeah it's easy to point fingers at the banks, the hedge funds, and the government and say, "They’re the villains!" And don’t get me wrong, they absolutely were—but the hard truth? It takes two to tango. Sure, the banks were handing out sh*tty loans like candy at a parade, but people were also taking on more debt than they could ever afford. They bought houses with money they didn’t have, took on loans they could barely pay, and believed the bubble would never burst. In the end, you can’t sell your soul to the devil if you have a pure soul. The system thrived on greed at every level—from Wall Street’s boardrooms to everyday people taking out third mortgages for stuff they didn’t need. And when the crash came? Everyone paid the price. And the best or worst part is this cycle will happen again and again, because that's why casinos, and the stock market exists, we are fueled by our greed, we all want it all and give nothing in return. To quote the legendary Gordon Gekko:

It is up to you to decide wether you think he is right or not.

If you want to learn more and have some fun you should watch the movie The Big Short and also you can check out the list we made about the top 10 must watch finance movies for every finance bro ever.