Financial Crisis Notes

Financial Crisis Notes - The Financial Crisis Basic Details...

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The Financial Crisis Basic Details
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Economics 2100. Fall 2009. Vivek Ghosal. Background Information ± A good website for details and readings related to some of the events and fiscal and monetary policy is: http://timeline.stlouisfed.org/
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Economics 2100. Fall 2009. Vivek Ghosal. In the News ± Mortgage Meltdown (Housing Bust) People forced out of homes because they can’t make their monthly payments. ± Sub-Prime Crisis Banks packaging bad loans and selling them off as solid investments to other banks. ± Credit Crunch Inability to find lenders or investors in order to raise cash levels.
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Economics 2100. Fall 2009. Vivek Ghosal. Housing Boom ± Housing boom up until 2006 led to exorbitant rise in property values ± People were borrowing from 4-10 times their incomes Recommended multiple is 2-3 times ± Adjustable-rate/Interest-only mortgages were very popular Often had very low “teaser” rates to entice buyers People could live in homes much more extravagant then they could really afford
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Economics 2100. Fall 2009. Vivek Ghosal. Housing Boom
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Housing Boom
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Financial Crisis Notes - The Financial Crisis Basic Details...

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