1 / 6

The Crisis

The Crisis. What is the chronology of the events below? (R:p.57). Poor borrowers go bankrupt Central banks help to prevent system collapse Poor borrowers can no longer repay their loans, so houses are returned to lenders.

ismael
Download Presentation

The Crisis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Crisis

  2. What is the chronology of the events below? (R:p.57) • Poor borrowers go bankrupt • Central banks help to prevent system collapse • Poor borrowers can no longer repay their loans, so houses are returned to lenders. • Some lenders go bust as they cannot sell the property, and some lenders sell loan obligations to investment banks. • Poor borrowers buy houses with loans • Because of low interest rates, it is easy to borrow. • But after some time, interest rates go up.

  3. The Financial Crisis • Mortgagelenders • Subprimeborrowers • Hedgefunds • Default (n.), to default on mortgage (v.) • To releaseliquidity R: p. 57

  4. Nobel Prize in Economic Sciences 2008 The New York Times Reading assignment: R.pp.57-58, ex.II.1, II.2 Paul Krugman

  5. A few more termsbeforethe video … http://vimeo.com/3261363 • Sovereignfunds, T-bills • Downpayment • Leverage • forsaken, foreclosed, forlorned • Collateralizeddebtobligations • Credit defaultswaps

  6. Reading assignment R. p.57-58 (ex. II.1,2) • Vodoo economics • Toxic assets • N-word Source: Paul Krugman, NY Times

More Related