Which market crash began after the U.S. housing bubble burst and became the central stock-market shock of 2008?

The stock-market shock that followed the bursting of the U.S. housing bubble and dominated 2008 was part of the global financial crisis.

The crisis developed from a combination of risky mortgage lending, complex mortgage securities, high leverage, and fragile funding arrangements. When U.S. house prices fell and mortgage defaults rose, financial institutions faced large losses and investors questioned the safety of banks and credit markets.

The failure of Lehman Brothers in September 2008 intensified the panic. Stock markets declined sharply around the world, businesses reduced investment, and unemployment rose. Governments provided bank rescues, fiscal support, and guarantees, while central banks cut interest rates and supplied emergency liquidity.

The crisis is often called the Great Recession in reference to its economic aftermath, but the terms are not identical. The financial crisis describes the breakdown in banking and credit markets; the Great Recession describes the severe economic downturn that followed.