Summary about the Credit Crunch

Since last few weeks ago or maybe even from the beginning of the economics class, we learned about the credit crunch. So what is credit crunch?
Credit crunch is a sudden increase in the general availability of loans, or a sudden increase in the cost of obtaining loans from banks. ( wikipedia)
Last Friday, Dima, a Russian student from our school, had really nice presentation about the credit crunch. I will just explain the basic things that I remember from what he said.
The credit crunch is caused by the collapse of the housing market. Then, why did the housing market collapsed? At first the price of the house all over the World, specially in US were very high so, a lot of people could not afford them easily. But this was a really good news to the banks. Because normally, when people wants to start their own business or when they want to invest on something, they usually put their houses in the bank and borrow money from the bank. But a lot of people who borrow money from the bank could not pay the bank money back, so banks had to sell those houses with extra profits. But the thing was because of the greedy minds of the housing market related people who tried to build so many not necessary houses, the burst of the house price became bubble. Not only this factor contributed to the collapse of the housing market but also sub-prime market did. Sub-prime market loaned so much with those sub-prime borrowers who have a heightened perceived risk of default, such as those who have a history of loan default. Because this sub-prime market loaned money to those who are not reliable to pay them back, their market had no chance to keep go on.
Collapse of the house market caused higher interests rates and all these failing factors results in collapse of the financial market.
The collapse of the financial market affected the confidence among the companies that no company relies on any other companies.
To protect such a big crisis, government try to adjust the situation and make it fair by decreasing the interest rates to encourage people to invest and spend more money, also investing money to the bank and raising the tax.