ABSTRACT
In Britain it is the run on the Northern Rock Bank, one of the country’s top fi ve mortgage lenders, in August 2007 that symbolises the start of what turned out to be a global fi nancial crisis of epic proportions. But in reality Northern Rock was just a little local casualty of a gathering storm that had begun when the boom in the American housing market peaked in 2006 and began a rapid slide towards slump. The bursting of the American housing market bubble, infl ated by aggressive lending to sub-prime (i.e. unusually risky) borrowers, quickly brought the entire world banking system to the brink of collapse. The nationalisation of Northern Rock was ultimately overshadowed by the sheer scale of the international crisis, the demise of much bigger and apparently stronger institutions and the size of the rescue packages hastily assembled by governments around the world in 2008. But Northern Rock remains important as a reminder of how much the British housing market has changed, how signifi cant housing has become in the economy and how interconnected national economies are in the present period.
