The problem with the U.S. subprime mortgage market — housing loans made to high-risk borrowers — had a global impact on markets this month, forcing monetary authorities in Japan, the United States and Europe to pump huge amounts of liquidity into money markets to prevent a credit crunch.

The U.S. Federal Reserve also felt compelled to cut the discount rate 0.5 percent in a special meeting on Aug. 17.

Let's take a look at how this became a global problem and what is at the bottom of the process.