The crisis as a classic financial panic Having laid out some of the triggers and vulnerabilities that set the stage for the crisis, I can briefly sketch the evolution of the crisis itself. As I have noted, developments in housing and mortgage markets played an important role as triggers.
Beginning in 2007, declining house prices and rising rates of foreclosure raised serious concerns about the values of mortgage-related assets and considerable uncertainty about where those losses would fall. The economy officially fell into recession in December 2007, following several months of financial stress. However, the most severe economic consequences followed the extreme market movements in the fall of 2008.