I find it hard to believe that subprime mortgages caused this crisis. First, only 5 percent of the mortgages were subprime. Second, not all of them are in arears or default. And third, the subprime craze only lasted about a year a half.
I agree. How could such a small part of our population cause global fininacial decline???
You are partially correct in the sense that sub-prime was not the ONLY reason. The main reason was parabolic spike in borrowing by indivduals and government, not for investment in business but for consumption. The sub-prime was the catalyst which pricked the credit baloon.