intro to financial crisis

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  • Created by: charlie
  • Created on: 09-05-16 21:48
created: securitisation/ mortgage backed securities
investment banks buying lots of mortgages + lumping together, then slicing them into (SAFE/OKAY/RISKY) sell to investors at different IR
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created: secondary market (FM+FM)
FM+FM buy mortgages from banks + sell them to people to buy homes (credit)/ due to Wall st. offering bad loans so did FM+FM= crash
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created: subprime borrowers
bad credit rating
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created: alt-a borrowers
gain loans without declaring their income
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Bubble burst
house prices kept on rising, FED didn't want infl, raised IR, which caused asset prices to dec
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Effects: banks
fell heavily due to all home owners defaulting on mortgages
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Response: FED
IR lowered + partial ownership of banks
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created: role of oil prices
2008 oil prices inc=cost inc=market prices inc=inc infl
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Effects: credit crunch
high unemployment + banks toughened standard on loans=no money causing credit crunch
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Effects: GDP
growth decreased resulting in DEBT (sovereign debt crisis)
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Other cards in this set

Card 2

Front

created: secondary market (FM+FM)

Back

FM+FM buy mortgages from banks + sell them to people to buy homes (credit)/ due to Wall st. offering bad loans so did FM+FM= crash

Card 3

Front

created: subprime borrowers

Back

Preview of the front of card 3

Card 4

Front

created: alt-a borrowers

Back

Preview of the front of card 4

Card 5

Front

Bubble burst

Back

Preview of the front of card 5
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