1 / 19

The Global Financial Crisis

The Global Financial Crisis. History & Context. 1990s – rapid expansion Unsustainable levels of gearing Benign economic conditions & policies favoring low and long-term interest rates Financial Innovation Increased investors participating in the global market. Credit Crunch.

summer
Download Presentation

The Global Financial 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 Global Financial Crisis

  2. History & Context • 1990s – rapid expansion • Unsustainable levels of gearing • Benign economic conditions & policies favoring low and long-term interest rates • Financial Innovation • Increased investors participating in the global market

  3. Credit Crunch • Credit Expansion • Excessive Liquidity • Breakdown in underwriting standards for sub-prime mortgages • Flaws in credit agencies’ rating of sub-prime residential mortgage-backed securities • Regulatory policies that failed to mitigate risk management weaknesses

  4. Banking • Liberal banking models • Poor oversight • Shadow banking

  5. Mortgages • Fannie Mae & Freddie Mac • Poor Oversight • Evictions

  6. http://www.youtube.com/watch?v=9I3soaecWj4&feature=related Overview • http://www.youtube.com/watch?v=P-PCyD7e2PI Banks

  7. Loans and their effect on the economy http://www.cnbc.com/id/15840232?video=1029028275&play=1 House of Cards - Lenders

  8. Some of the effects of the bad loans…

  9. Nobody was getting declined from getting the loans they wanted.

  10. The type of people that get the quick loans.

  11. Banks and Loan Industry made loans to the public • Wall Street decided these would be high yield loans to invest in • Wall Street packaged the loans in what they called CDOs http://www.bing.com/videos/watch/video/newshour-w-jim-lehrer-solman-s-domino-effect-pt-1-pbs/3248967E3C2B040EE01B3248967E3C2B040EE01B - Dominos

  12. Rating Companies and the BBB-AAA system • Alan Greenspan • World wide sale of CDOs

  13. National losses • 8.3 trillion between 2007-late 2008. • http://www.youtube.com/watch?v=lNS8IY_Td14GB Inconvenient Debt • http://www.youtube.com/watch?v=U-d9uoIXbZs&feature=related GB Money Bubble

  14. Effects in Olympia • Vacant businesses • Closing restaurantsBatdorf and Bronson • Decrease in sales • Cutting hours

  15. Solutions to the Financial Crisis

  16. National Level:Government Stimulus Bailouts – Government money to banks: Buying “troubled assets” Stimulus – Government money to people and businesses to increase spending National Protectionism – Tariffs and Subsidies

  17. International Solutions • IMF loans – Capital available to IMF increased • Intergovernmental policy correlation – EU and US cooperation

  18. Local Solutions • DON’T BUY A HOUSE YOU CAN’T AFFORD! • Don’t be greedy! • Buy Stuff!

More Related