1. Global Financial Crisis
Globalization Unit Lesson 4

2. Objectives
Explore events leading up to financial crisis that struck the US and the world in 2008.
Interpret political cartoons relating to global economic crisis.
Consider the connections between globalization and the current economic crisis.
Describe current Eurozone crisis.

3. Warm Up IMF – short term assistance
What’s the difference between the IMF and the World Bank?
IMF – short term assistance
World Bank – long term dvpt aid

5. Subprime Mortgage Crisis
2008 US Financial crisis
Subprime Mortgage Crisis
Global Effects
Global Pool $  MBS
’06 Housing Bubble Bursts  Bankruptcies & Defaults  AIG Can’t Cover CDS
Investment banks  massive losses
Fed Reserve (TARP) & EU inject billions
No lending/credit
Internatl trade ↓, economies slow
Stock values ↓
Low interest rates = weaker US $ = less profit trade partners

6. Eurozone EU (28) Eurozone Free mvmt people, goods, services, & capital
European Commission
Eurozone
19 who use same currency (euro)
European Central Bank (monetary policy)
Separate national fiscal policies (budgets)

7. Eurozone debt Crisis When: Late 2009
Why: Government Debts, Banking & Housing Crisis (similar to US – pool & securitize investments) & Slow, Uneven Economic Growth
Where: PIIGS and others
Who’s In Charge: European Commission, European Central Bank (ECB), IMF
How Fix: Bailouts, Lower Interest Rates, Austerity Budgets
Consequences: Economic & Political Changes, Social Upheaval
Additional video explanations at
CNN Explains
NY Times

8. Results
Moderate Recovery
Debt Remains (Greece, Spain)
Exiting Euro?

9. Activity
Video “Global Economic Issues”

10. Closure
Taking into account everything you’ve learned, should the global economy be better regulated? What impact may these regulations have?