The financial and economic crisis of 2008 was the bursting of an immense credit bubble, the largest in history. In a credit bubble, lending standards become less and less stringent. Easy credit, in turn, helps drive up prices within a class of assets, usually real estate or equities. These newly risen asset values then form the collateral for further borrowing. The recent credit bubble had a large real estate component but extended to a wide variety of deals—leveraged buyouts, major mergers, industry roll-ups, certain hedge funds, and so on.
