ABSTRACT
This chapter begins by describing the 2007–2008 financial crisis and examining the causes of such crises in general. It takes a closer look at the growing inequality of wealth and income in the United States-a central aspect of the financial crisis and a major economic challenge of the current century. Then the chapter also suggests some measures for avoiding future crises and creating a more equitable and sustainable economic system. Securitization is the process of pooling various kinds of loans (mortgages, auto loans, credit card debts, and commercial bank loans), slicing and sorting them according to their estimated risk levels, and repackaging them into new financial instruments. The financial crisis that started in the United States quickly spread to the rest of the world. World economic growth, which had remained relatively steady between 2004 and 2007, experienced a sharp decline of almost 3 percent in 2009.
