Global Financial Crisis

Global Financial Crisis - Why Study Money and Banking? An...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
An Overview of the Global Financial Crisis Why Study Money and Banking? 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
A Brief History of The Global Financial Crisis Background The Crisis Sales and Seizures US Government Bailouts Volatility! More problems. .. New government New fears Banks and Cars 2
Background image of page 2
Background U.S Housing market peaked in 2006 June 2007 Bear Stearns closed two hedge funds September 2008 full financial panic Hundreds of billions in mortgage-related investments went bad Many investment banks failed Lehman Brothers (failed) Bear Stearns (taken over) Lloyds (bailed out) Citi (bailed out) 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background U.S. Congress passed $700 billion bailout plan in October 2009. US Federal Reserve (US Central Bank ) added liquidity to ease credit constraints. Still banks across Europe fell (Scotland, England – North Bank etc.) Countries from Iceland to Pakistan sought financial aid from the IMF. Tightening credit led to a reduction in demand, job cuts and finally a global recession. China enacted $500 billion stimulus plan 4
Background image of page 4
Background Banks were reporting profits and had mostly repaid bailout funds. 2010 Greece revealed debt problem Ripple effect throughout Europe International Monetary Fund makes $1 trillion available Economic growth slowing in US. US Federal Reserve presents second round of “quantitative easing” incl. $600 billion injected into economy + pledge to keep interest rates at ultra-low levels for an 5
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Tech bubble back in 1990. Stock market fell in 2000 - led to a recession US Federal Reserve Board (and other central banks ) lowered interest rates to encourage economic activity Low interest rates => cheaper mortgage payments => increased demand for housing. As housing market got hotter than quality
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This document was uploaded on 12/04/2011.

Page1 / 20

Global Financial Crisis - Why Study Money and Banking? An...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online