Explanation

The correct sequence of events during the 2007-2009 financial crisis is:

1. Subprime Mortgage Defaults (2006-2007)

• The crisis originated with rising defaults on subprime mortgages in the U.S.
• Triggered by declining home prices and risky lending practices

2. Collapse of Lehman Brothers (September 2008)

• The failure of this major investment bank escalated the financial turmoil
• Highlighted systemic risk in financial markets

3. Global Credit Crunch (Late 2008)

• Lehman's collapse caused interbank lending to freeze
• Banks became reluctant to lend to each other, creating a liquidity crisis

4. Stock Market Crash (Late 2008-2009)

• Investor panic led to sharp declines in global stock markets
• Reflected fears of prolonged recession and systemic failures

5. Sovereign Debt Crisis in Europe (2010-2012)

• Aftershocks of the financial crisis and fiscal stimulus strained public finances
• Particularly affected Greece, Portugal, and Ireland

This sequence shows the progression from the initial housing market problems through the banking crisis to the broader economic and sovereign debt consequences.