5 October 2015 by Sigrid Brevik Wangsness.  The largest economy in the world with a major impact on the global economy  Until October 2008 an economic.

Slides:

Advertisements

Similar presentations

Financial Crisis of 2008 Econ Worst recession in 80 years How did it happen? How was the situation before the crisis? ‘ Great Moderation’ Stable.

Advertisements

GLOBALIZATION UNIT LESSON 3 GLOBAL FINANCIAL CRISIS.

HW check: Banking – the bare essentials (RB, p 26) 1 bank account 12 goes bust 2 cash 13 payments 3 in 14 debit 4 deposits 15 credit 5 interest (rate)

The Old Days Home buyer Regulated Retail Bank 1 $ Mortgage.

Subprime Crisis By: Brad, Mario, Andrew, Matt April 30, 2008.

AP Economics Mr. Bernstein Module 26: The Federal Reserve System: History and Structure February 19, 2015.

THE GREAT MODERATION Good luck? Structure? Policy?

The Subprime Mortgage Crisis

Macroeconomic Issues The Great Recession 12/2007-6/2009 Shaded area = recession.

When Wall Street Fell: The Financial Crisis of 2008 BADM 381: Multinational Management October 14, 2008 Angela Grossi Devin Kelly Eric Slehofer Laura Beschorner.

The Great Recession Causes & Prospects

Prepared for Dr. Ramon Castillo Econ 462 CALIFORNIA STATE UNIVERSITY, LOS ANGELES Spring 2011 U.S Financial Crisis Present by Huan.

Financial Crisis and Market Panic Keith Maskus October 27, 2008.

Homeowners get mortgage loans from lenders in order to buy homes. This has long been the so-called American dream. As homeowners pay off their mortgages.

The U.S. economy is currently in a recession. 1.True 2.False.

Lecture 10 Thursday, October 2 Finance. Some Basic Concepts Money Investment Credit Assets and Capital gains Securities: Stocks, bonds, derivatives, etc.

Global Financial Crisis 1 Don Kopka, PhD Management Dept Towson University.

Should central banks always throw rescue rafts to failing banks?

GLOBALIZATION LESSON 3 GLOBAL FINANCIAL CRISIS. OBJECTIVES Review events leading up to financial crisis that struck the US in Explore the reverberations.

Financial Crises Analysis. Overview Asian Financial Crisis July Mainly South East Asian Countries Started in Thailand 2008 Financial Crisis.

THE GREAT CONTRACTION : WHO CAUSED IT & HOW DID IT HAPPEN? By : Charlie Haumesser Discussants : Ashley Hucksoll & Mikael Leveille.

Dallas Hall, Chuck Dobson, Guy Tahye & Tunde Olabiyi.

The subprime crisis and the credit crunch MK, Unit 14.

The “Great Recession”: The Government’s Response.

Eric Revell BA 543 Financial Markets & Institutions 5/7/2013 Troubled Asset Relief Program (TARP)

ALOMAR_212_4 1 Financial Market Instruments. ALOMAR_212_42 What are the securities (instruments) traded in the financial market? 1- Money Market Instruments:

Sub-Prime Crisis Dr. Green. False Prosperity of the Credit Economy Low interest rates – Car loans—no money down or low interest – Credit card loans—0%

© 2012 Cengage Learning. Residential Mortgage Lending: Principles and Practices, 6e Chapter 3 Role of Residential Mortgage Lending in the Economy.

Causes of the Financial Crisis (PREP: Open NPR clip here and load at beginning of lecture) (PREP: Open NPR clip here and load at beginning of lecture)

Global Financial Crisis

The Causes and Cures of the Economic Crisis Dean Baker, Co-Director Center for Economic and Policy Research April 13, 2012.

Economic Bubbles How the housing market led to the Great Recession.

ASSET BUBBLES AND THE FINANCIAL CRISIS OF 2008? A. G. MALLIARIS Presented to the Xavier EMBA, November 26, 2008 What are Asset Bubbles? Variety of Bubbles.

The Current Economic and Financial Crises. How did we get here? Background Housing Market Mortgage Market Main Street Wall Street.

Overview   How did the financial crisis affect us?   What are some likely hypotheses regarding the causes of the financial collapse?   What do today's.

Macroeconomic Issues The Great Recession: GDP begins to drop Shaded area = recession.

GRAVITAS Capital Advisors, Inc. 1 The Advantage of Innovative Thinking.

The Financial Crisis of 2008 By Franz Soerensen. The Creation of the bubble (1 of 8) Prior to deregulation fewer could get mortgages (Ferguson) Lenders.

Financial Crises, Panics, and Unconventional Monetary Policy

The Economy How can we determine how the economy is doing overall? How does government try to help when things are not going well?

The Roots of Stabilizing the Economy and The Roots of Government Intervention.

Money, Banking, and the Fed How does money affect economic activity?

Macroeconomic Issues The Great Recession: GDP begins to drop Shaded area = recession.

Copyright © 2010 Pearson Addison-Wesley. All rights reserved. Chapter 4 Financial Crises and the Subprime Meltdown.

The Creation of a Housing Bubble. Speculative Bubbles USA Holland Economic Bubbles have existed throughout history!

Wall Street 2 (Day 3) Take Handout Take out notebook – Write down How did this start? You will Understand how events from 1980’s to 2006 led to crash and.

The Financial Crisis and the Great Recession 14. Start with the 2001 recession and weak recovery Fed responds by cutting interest rates (FFR = 1%) Since.

Y376 International Political Economy March 10, 2011.

Financial Collapse Background 1997: Global economic community suffered severe downturn 1998: Strain continues with financial crisis in Russia 2001:

Financial Markets. Saving and Capital Formation Saving money makes economic growth possible One’s person savings can represent another person’s loan Savings.

Figure 8.3: Subprime Lending Fiasco – U.S. Housing Bubble U.S. Housing Bubble Unsustainably High House Prices Very Low Interest Rates Excessive Foreign.

20-1 The Money Supply and Banking Systems Chapter 20.

Global Financial Crisis GLOBALIZATION LESSON 3. Objectives  Review events leading up to financial crisis that struck the US in  Explore the reverberations.

Wall Street Voodoo The New York Times (Jan 18, 09) Paul Krugman on How to Deal with Troubled Financial Crisis.

1. What would you do with $5,000? Be specific. 2. What percentage of taxes should the government take? 3. Where is the safest place to keep your money?

The Financial Sector: Ten Fatal Flaws “When the capital development of a country becomes a by- product of the activities of a casino, the job is likely.

SEOWON KIM, JUNGMIN CHAE.  GOVERNMENT cannot finance its regular activities, including providing social services, paying for defense, and managing other.

Federal Reserve and Monetary Policy Chapter 18. Role of Fed Fed looks at inflation and unemployment and inflation is the key. – High inflation can destroy.

The Financial Crisis of 2008, Simplified (a lot).

Financial Markets.

The 2007 Financial Crisis Who is to blame?.

Figure 8.1: Subprime Lending Fiasco – Stages

17 October 2016 by Sigrid Brevik Wangsness

The Federal Reserve System: History and Structure

The Financial Crisis of 2008

Introduction to Banking & Finance

Monetary Policy and Central Banking

How our Central Bank is structured

Financial Institutions and Markets

The Great Recession: GDP begins to drop

Presentation transcript:

5 October 2015 by Sigrid Brevik Wangsness

 The largest economy in the world with a major impact on the global economy  Until October 2008 an economic superpower – did the financial crisis change that?  A significant characteristic of the US economy is its resilience, i.e. its ability to bounce back after slowdowns. Has this happened again?

 Collapse of the housing market The property bubble burst: House prices dropped dramatically  Sub-prime loans = risky loans (mortgage loans for borrowers with a poor credit history)

 The banking crisis Banks had granted too many risky loans Bad debts – huge losses Complicated financial instruments: MBSs (mortgage-backed securities) CDOs (collateralized debt obligations ) “Credit crunch”

Vocabulary  To default Treasury bills  Leverage Interest  Homeowners Broker  Mortgage lender AAA rating  Investment banker Prices plummet  Credit Default Swap Foreclose

 Speculation and excessive risks on the stock markets Lack of trust Free fall of share prices  Insufficient regulatory system Deregulation encouraged “gambling” Repeal of Glass-Steagall Act (1999)

 The Federal Reserve System (the Fed) (= the US central bank) Too low interest for too long? Too easy to borrow from the Fed? Did it therefore indirectly encourage speculation?

 US government intervention in the economy Rescue (bail-out) packages  The role of the Federal Reserve System "Head of the Fed” at the time: Ben Bernanke “Quantitative easing”

 Part –nationalization of American banks  Cooperation between major economies: Summits (G20), co-ordinated efforts  The IMF

 National Deficit/ Debt USD 18.5 trillion. How serious is that?  Trade Deficit Current-account balance: -$429bn (Q2) -2.6% of GDP in 2015 (forecast)  Budget Deficit Budget balance: -2.6% of GDP in 2015 (forecast)

 GDP: +2.7% growth in Q2, 2015 Forecast for 2015: +2.4%  Inflation: +0.2% (Aug. 2015) Forecast for 2015: +0.4%  Unemployment: 5.1% (Aug. 2015)

(See article in the Comp.)  The Primary Sector  The Secondary Sector  The Tertiary Sector

 The Fed o Head of the Fed”: Janet Yellen o Organization o Appointment o Key powers: Monetary Policy Banking Regulations  Wall Street o NYSE, AMEX, NASDAQ o Banks, insurance companies, rating agencies, brokers, asset managers etc.