Lecture17 - 1 1 Lecture 17: The Global Financial Crisis...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 1 Lecture 17: The Global Financial Crisis ECON435: Financial Markets and the Macroeconomy Anton Korinek Spring 2011 2 Capital Inflows to the US Export-oriented growth (China, Vietnam, ) Precautionary savings (East Asia, oil exporters, ) Large capital inflows to the US in late 1990s Internet bubble & bust Aggressive interest rate cuts by Fed, but the corporate sector was still hurting Consumers took advantage of low rates 3 Deregulation After the fall of communism, capitalism was triumphant belief that the market was infallible Zealous deregulation prepared ground for securitization, credit default swaps etc. 4 Financial Innovation squeezing the most AAA from a pool of underlying assets wrong models attempt to diversify systematic risk agency problems between home owners mortgage brokers banks investment banks investors 5 Case-Shiller Home Price Index 100.00 120.00 140.00 160.00 180.00 200.00200....
View Full Document

Page1 / 3

Lecture17 - 1 1 Lecture 17: The Global Financial Crisis...

This preview shows document pages 1 - 2. Sign up to view the full document.

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