Study sets matching "financial crisis"

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Study sets matching "financial crisis"

17 terms
financial crisis
to downsize
to be made redundant
to be laid off
to reduce (working hours)
to make (a company or organization) smaller by eliminating st…
to be fired/ to get fired (e.g. unstable economy, bad company…
to be made redundant (not your fault)
to cut down on, to make smaller
to downsize
to make (a company or organization) smaller by eliminating st…
to be made redundant
to be fired/ to get fired (e.g. unstable economy, bad company…
15 terms
Financial Crisis
How Does Securitization add value?
What type of financial assets can be s…
Special purpose entities (SPEs)
What happens with the transfer of an a…
1)Bundling large number of asset-backed securities reduces ri…
Assets that generate steady future payment streams
are most often part of the securitization. It is a legal cond…
The transferor surrenders control over the transferred assets…
How Does Securitization add value?
1)Bundling large number of asset-backed securities reduces ri…
What type of financial assets can be s…
Assets that generate steady future payment streams
Financial Crisis
What is a mismatch?
Funding mismatch in the shadow banking…
Fire Sale
Minsky Moment
occurs when assets that earn interest do not balance with lia…
shadow banks were unable to get short term loans
severe selloff that the government has to stop
When a bubble bursts
What is a mismatch?
occurs when assets that earn interest do not balance with lia…
Funding mismatch in the shadow banking…
shadow banks were unable to get short term loans
17 terms
Financial crisis
credit crunch
economic meltdown
financial bailout
mortgage
restricción crediticia
crisis económica
rescate financiero
hipoteca
credit crunch
restricción crediticia
economic meltdown
crisis económica
43 terms
Financial Crisis
household, 7, 8, 12
two million, 15, 70
Ireland, Spain, 23, 12, 22, Goldman Sa…
Goldman Sachs, deficit
"The post-crisis U.S. recession officially ended in June 2009…
"more than ___ ___ homes were foreclosed upon in the United S…
"In the nations most severely affected by the European debt c…
___ ___ helped the Greek government to mask the true extent o…
household, 7, 8, 12
"The post-crisis U.S. recession officially ended in June 2009…
two million, 15, 70
"more than ___ ___ homes were foreclosed upon in the United S…
Financial crisis
Balance of payment crisis/currency cri…
The policy Trilemma/The inconsistent t…
Fiscal Stimulus
Financial rescue
-a large, sudden fall in the value of a country's currency ... I…
-states that a government can only choose two out of the thre…
-It is meant to increase aggregate demand, output, and employ…
-Several policy instruments designed to restore functionality…
Balance of payment crisis/currency cri…
-a large, sudden fall in the value of a country's currency ... I…
The policy Trilemma/The inconsistent t…
-states that a government can only choose two out of the thre…
22 terms
Financial Crisis
Financial Globalization
Human Resources
Non Human Resources
Capital
increasing global linkages created through cross-border finan…
all forms of labor and skill used to produce goods and services
all resources other than human resources such as machines and…
a category of non human resources comprises all machines, imp…
Financial Globalization
increasing global linkages created through cross-border finan…
Human Resources
all forms of labor and skill used to produce goods and services
Financial Crisis
Mortgage
Subprime Mortgage
Securitization
Leverage
A special type of loan for the purchase of a house or other r…
A type of mortgage that is normally made out to borrowers wit…
The process through which an issuer creates a financial instr…
The amount of debt used to finance a firm's assets. A firm wi…
Mortgage
A special type of loan for the purchase of a house or other r…
Subprime Mortgage
A type of mortgage that is normally made out to borrowers wit…
Financial Crisis
Adverse Selection
Monetary Union
Floating Exchange Rate
Theory of Optimal Currency Area
occurs when there's a lack of symmetric information prior to…
A currency union (also known as monetary union) involves two…
different from floating exchange rate regime. set by the fore…
In economics, an optimum currency area (OCA), also known as a…
Adverse Selection
occurs when there's a lack of symmetric information prior to…
Monetary Union
A currency union (also known as monetary union) involves two…
Financial Crisis
Angela Merkel
Financial Contagion
Trade Imbalances
Austerity
Chancellor of Germany... Led Europe through the financial crisis…
GIIPS governments fell due to their integrated financial mark…
Trade surplus - export more than you import... Trade deficit - i…
An EU policy of reducing government budget deficits through s…
Angela Merkel
Chancellor of Germany... Led Europe through the financial crisis…
Financial Contagion
GIIPS governments fell due to their integrated financial mark…
Financial Crisis
Assets
Bear Market
Bond
Bull Market
property owned by a person or company, regarded as having val…
a market in which prices are falling, encouraging selling.
a debt investment in which an investor loans money to an enti…
a market in which share prices are rising, encouraging buying.
Assets
property owned by a person or company, regarded as having val…
Bear Market
a market in which prices are falling, encouraging selling.
23 terms
financial crisis
Run begins
Fed's First Response
Northern Rock
TAF
August 9, 2007: the run begins in the form of increased hairc…
Mid-August 2007: the Fed's first response is to increase stan…
September 14, 2007: Northern Rock is unable to refinance secu…
December 2007: Fed creates Term Auction Facility (TAF) to add…
Run begins
August 9, 2007: the run begins in the form of increased hairc…
Fed's First Response
Mid-August 2007: the Fed's first response is to increase stan…
19 terms
Financial Crisis
Traditional Mortgage
Securitization
Mortgage Backed Securities
Freddie Mack and Fannie May
person deposits $ in bank at low R, bank lends $ to another p…
mortgages sold to institutions that bundles them together and…
safe for investors because it is a pool of risks; efficient w…
bundled smaller mortgages but insured buyer against nonperfor…
Traditional Mortgage
person deposits $ in bank at low R, bank lends $ to another p…
Securitization
mortgages sold to institutions that bundles them together and…
47 terms
Financial Crisis
Alan Greenspan
G20
Types of Financial Crisis
Banking Crisis
-Chairman of Fed, kept interest rate low for too long and enc…
Based almost everyone for the crisis
1. Banking Crisis (recent) ... 2. Market Crisis (Russian debt de…
Those that originate in the banking sector
Alan Greenspan
-Chairman of Fed, kept interest rate low for too long and enc…
G20
Based almost everyone for the crisis
Financial Crisis
turbulance on the market
volatility of the market
sharp and sophisticated people
the greatest brains in the world
turbulencje na rynku
chwiejność rynku
mądrzy, obyci w świecie ludzie
największe umysły świata
turbulance on the market
turbulencje na rynku
volatility of the market
chwiejność rynku
17 terms
Financial Crisis
Financial Crisis
Basic Activity of banks
Problems when banks lose liquidity
Bank Run
A significant disruption in the flow of funds from lenders to…
take in deposits and make loans creating a liquidity mismatch…
they have to sell illiquid funds which is expensive but that'…
the processes by which depositors who have lost confidence in…
Financial Crisis
A significant disruption in the flow of funds from lenders to…
Basic Activity of banks
take in deposits and make loans creating a liquidity mismatch…
11 terms
Financial Crisis
Belief that housing prices would conti…
who are the three groups of people bla…
bad incentives/dishonest behavior (fin…
Policies (government is to blame)
-homeowners borrowed a lot... -rating agencies built this into t…
-individuals... -government... -financial sector
-originate to sell mortgage loans(reduced incentive to screen…
-had good intentions but unintended consequences... -tried to en…
Belief that housing prices would conti…
-homeowners borrowed a lot... -rating agencies built this into t…
who are the three groups of people bla…
-individuals... -government... -financial sector
Financial Crisis
main cause
causes
funny loans were seen as less risky be…
oil tanker analogy
bad risk management
low interest rates... housing bubble... funny loans... securitization…
low interest rates
fed reserve compartmentalize
main cause
bad risk management
causes
low interest rates... housing bubble... funny loans... securitization…
Financial Crisis
behavioral view
view that banking panic came out of no…
originate to destribut securities brok…
securitization chain
people were overexcited about the hosing mkt (but banks were…
but doesnt highlight how securitization really broke down
consistent... banks incentivized by volume not quality and so th…
- Rating agency > underwriter > manager > loan monitors > ori…
behavioral view
people were overexcited about the hosing mkt (but banks were…
view that banking panic came out of no…
but doesnt highlight how securitization really broke down
5 terms
Financial Crisis
Housing market
ARM's
What did AIG do?
Why did housing prices suddenly fall?
push by investors to purchase mortgage backed securities led…
adjustable rate mortgages... -financial companies bundled togeth…
began issuing credit-default swaps which led everyone to bet…
as demand for houses rose, so did the supply ... prices rose unt…
Housing market
push by investors to purchase mortgage backed securities led…
ARM's
adjustable rate mortgages... -financial companies bundled togeth…
46 terms
Financial crisis
Conventional monetary policy is a tool…
Why would the Fed choose to reduce the…
Why did the Fed undertake large-scale…
How did purchasing Treasury and GSE mo…
A
B
B
C
Conventional monetary policy is a tool…
A
Why would the Fed choose to reduce the…
B
financial crisis
What financial crisis warning signs di…
The authors describe failures to "quel…
Why were financial regulators "not at…
What three examples do the authors giv…
1. Explosion in risky subprime lending and securitization... 2.…
1. Fed's failure to stem the flow of toxic mortgages by setti…
1. Belief in the self-correcting nature of the markets... 2. Bel…
1. Security and Exchange commission could have required more…
What financial crisis warning signs di…
1. Explosion in risky subprime lending and securitization... 2.…
The authors describe failures to "quel…
1. Fed's failure to stem the flow of toxic mortgages by setti…
Financial crisis
Reserve ratio
Assets
Liabilities
Equity
The percentage of every deposit made in a checking account th…
What a bank owns
What the bank owes to others
Total assets - total liabilities
Reserve ratio
The percentage of every deposit made in a checking account th…
Assets
What a bank owns
25 terms
Financial Crisis
Many large firms hold assets that was…
to solve this lack of insurance proble…
Repurchase Agreements
Eventually supply of treasury bonds an…
what was covered under FDIC
relatively safe assets... -usually short term treasury bonds
- created by banks ... -sell treasury bonds to other banks for s…
- became scarce so firms had to start creating other assets
Many large firms hold assets that was…
what was covered under FDIC
to solve this lack of insurance proble…
relatively safe assets... -usually short term treasury bonds
11 terms
Financial Crisis
Wallerstein
Kahler
Foreign Direct Investment
Globalization
Capitalism is inherently flawed because Core and Periphery is…
Global economic multilaterals demonstrate efficacy through un…
Funding provided by firms to establish or acquire foreign com…
integration and interdependence of economies across the world
Wallerstein
Capitalism is inherently flawed because Core and Periphery is…
Kahler
Global economic multilaterals demonstrate efficacy through un…
Financial Crisis
Asia
Underling Cause of Asian Crisis
Asia - Effects on Growth
Argentina
• Rest of World was lending/investing in South East Asia as t…
• Rest of the World got caught up in the hype... • Lent to govt…
• Effect on growth overall quite small - due to unwise invest…
• Plagued by inflation, import and export taxes, and govt mis…
Asia
• Rest of World was lending/investing in South East Asia as t…
Underling Cause of Asian Crisis
• Rest of the World got caught up in the hype... • Lent to govt…
32 terms
Financial crisis
تجاهل / يتجاهل
صندوق النقد الدولي
تحذيرات
بوقوع
To ignore
IMF
Warnings
Occurrence
تجاهل / يتجاهل
To ignore
صندوق النقد الدولي
IMF
Financial Crisis
of common purchases are made on impuls…
household do not have a buget
of american live to paycheck to paycheck
of american spend more than they earn
50%
57%
61%
40%
of common purchases are made on impuls…
50%
household do not have a buget
57%
21 terms
Financial crisis
crisis
crises
investor
lending crisis
válság
válságok
befektető
hitelválság
crisis
válság
crises
válságok
16 terms
Financial Crisis
1. Investors bought mortgage backed se…
mortgage
default
mortgage backed securities
2008 Financial Crisis
a house loan
failure to make payments
take several loans and bundle them together so that investors…
1. Investors bought mortgage backed se…
2008 Financial Crisis
mortgage
a house loan
Financial Crisis
turbulance on the market
volatility of the market
sharp and sophisticated people
the greatest brains in the world
turbulencje na rynku
chwiejność rynku
mądrzy, obyci w świecie ludzie
największe umysły świata
turbulance on the market
turbulencje na rynku
volatility of the market
chwiejność rynku
The Financial Crisis
2007 Mortgage Crisis
Takeover in GSE
2008 Housing & Economic Recovery Act
2008 Troubled Asset Relief Program
- Delinquencies and foreclosures increased rapidly in the sub…
- Paid obligations the GSEs owed ... - Kept money flowing to bac…
- Problem: Collapse of the Secondary Mortgage Market... - Takeo…
- Bailout of financial institutions... - Problem: Collapse of t…
2007 Mortgage Crisis
- Delinquencies and foreclosures increased rapidly in the sub…
Takeover in GSE
- Paid obligations the GSEs owed ... - Kept money flowing to bac…
Financial Crisis
Where did French forces suffer crushin…
Although France lost much of her overs…
What was France unable to do at the Tr…
As well as exposing French soldiers to…
North America... India
Martinique... Guadeloupe
Recover most of her lost possessions
Through loans brokered by finance minister Jacques Necker
Where did French forces suffer crushin…
North America... India
Although France lost much of her overs…
Martinique... Guadeloupe
11 terms
The Financial Crisis
the housig bubble
Equity
underwater mortgage
CDOS
investors expected home prices to rise so they purchases home…
difference between the market value of your home and the amou…
the balance of the mortgage loan is higher than the fair mark…
packaged assets together into a security or bond that could t…
the housig bubble
investors expected home prices to rise so they purchases home…
Equity
difference between the market value of your home and the amou…
45 terms
2008 Financial Crisis
Derivatives
Credit Default Swap
Risk
Bond
privately held negotiable contract between two parties, a sec…
a type of derivative/insurance involving a third party, i.e.…
the degree of uncertainty associated with the return on an as…
a loan to a government or corporation in return for a promise…
Derivatives
privately held negotiable contract between two parties, a sec…
Credit Default Swap
a type of derivative/insurance involving a third party, i.e.…
The Financial Crisis
What are the 4Cs for home loans within…
What are the 3Cs for business credit w…
What was the regional market volatilit…
What is so significant about the Lehma…
1. Credit... - quantity & quality... - duration (short/long)... 2. C…
1. Collateral... - in the case of foreclosure... 2. Cash Flow... - a…
Before... - Housing prices particularly on west and NE and Flor…
2008... Largest in US History ... Over $600 Billion... - initiates fa…
What are the 4Cs for home loans within…
1. Credit... - quantity & quality... - duration (short/long)... 2. C…
What are the 3Cs for business credit w…
1. Collateral... - in the case of foreclosure... 2. Cash Flow... - a…
11 terms
financial crisis
imprudent
mortgage
foreclosure
adjustable
leichtsinnig, unbesonnen
Verpfändung, Pfandbrief, Hypothek
Zwangsvollstreckung
regulierbar,verstellbar, anpassungsfähig
imprudent
leichtsinnig, unbesonnen
mortgage
Verpfändung, Pfandbrief, Hypothek
43 terms
Financial Ministers and Financial Crisis
Turgot (appointed soon after Louis cam…
Turgot inherited debts from two wars,…
Debts inhereited by Turgot monetary va…
Date Necker published the Compte Rendu
1775
War of Austrian Succession (1740-48) and the 7 Years War (175…
1.2 billion livres
1781
Turgot (appointed soon after Louis cam…
1775
Turgot inherited debts from two wars,…
War of Austrian Succession (1740-48) and the 7 Years War (175…
16 terms
The Financial crisis of 2008
1.)The crisis brings together homeowne…
2.) The homeowners and investors are b…
3.) Traditionally investors bought
4.)After 09/11 and the dot com bubble…
investors (money)
by the financial system
government bonds
lowers interest rates to 1%
1.)The crisis brings together homeowne…
investors (money)
2.) The homeowners and investors are b…
by the financial system
Financial Crisis Test 1
Franklin Delano Roosevelt
Herbert Hoover
Robert Rubin
Lawrence Summers
Democratic president who created the New Deal to counter the…
31st; a globally experienced engineer, believed strongly in t…
70th Secretary of Treasury during Clinton Administration; in…
Treasury Secretary after Rubin; major role in deregulation of…
Franklin Delano Roosevelt
Democratic president who created the New Deal to counter the…
Herbert Hoover
31st; a globally experienced engineer, believed strongly in t…
Financial Crisis of 2008
Subprime mortgage
Risk
Foreclosure
Too big to fail
a type of loan granted to individuals with poor credit histor…
the degree of uncertainty associated with the return on an as…
The legal process used to force the payment of debt secured b…
Theory that if a financial institution is giant and is woven…
Subprime mortgage
a type of loan granted to individuals with poor credit histor…
Risk
the degree of uncertainty associated with the return on an as…
22 terms
Global Financial Crisis - Economics
Globalization
Contagion
Sub-Prime
Credit Crisis
The spread of market changes, good or bad, from one regional…
Borrowers with a bad credit history
Globalization
Contagion
The spread of market changes, good or bad, from one regional…
11 terms
The Financial Crisis 2008: adjectives
awry
contrite
dismayed
inevitable
when s.th is irregular or goes wrong
feeling or expressing regret or remorse
full of distress / disappointment
certain to happen; unavoidable
awry
when s.th is irregular or goes wrong
contrite
feeling or expressing regret or remorse
12 terms
The Financial Crisis 2008: nouns
ascendance
a bank-run
a betrayal
coffers
to have superiority, supremacy; domination
mass withdrawals from a bank due to the fear of the clients,
an act of disloyalty
Government funds or finances
ascendance
to have superiority, supremacy; domination
a bank-run
mass withdrawals from a bank due to the fear of the clients,
11 terms
Class 13-Financial Crisis
Fannie and Freddie
The markets leading up to the crisis
Investors leading up to the crisis
Investment Banks leading up to the cri…
created to purchase mtgs from banks, package into pools, sell…
1. Low interest rates post Tech Bubble.... 2. Housing demand, go…
1. massive amounts of money from international markets.... 2."To…
1. Competed with Fannie and Freddie.... 2. Created MBS & CDOs.... 3…
Fannie and Freddie
created to purchase mtgs from banks, package into pools, sell…
The markets leading up to the crisis
1. Low interest rates post Tech Bubble.... 2. Housing demand, go…
Financial Crisis Terms
risk averse
risk neutral
risk lover
investment
not wanting to take risk
indifferent to risk
prefer risk
spending on the supplies that builds capital stock... spending…
risk averse
not wanting to take risk
risk neutral
indifferent to risk
12 terms
Financial Crisis of 2008 Quiz
What is the name of the Insurer that w…
What investment bank's Chapter 11 fili…
What happened to Freddie Mac and Fanni…
What was the total cost of the bank ba…
AIG
Lehman Brothers Holding Inc.
They were seized by the government
$700 billion
What is the name of the Insurer that w…
AIG
What investment bank's Chapter 11 fili…
Lehman Brothers Holding Inc.
9 terms
Ch 16: Financial Crisis
irrational expectations
leverage
herd instinct
recency effect
the price of an asset can become so inflated that it is uncle…
the practice of using borrowed money to pay for investments
may push investors to buy because everyone else is
a cognitive bias that causes humans to overvalue recent exper…
irrational expectations
the price of an asset can become so inflated that it is uncle…
leverage
the practice of using borrowed money to pay for investments
7 terms
Chapter 16: Financial Crisis
Leverage
Subprime Mortgage
Securitization
Debt Service
the practice of using borrowed money to pay for investments
a mortgage loan made to a borrower with a low credit score
the practice of packaging individual debts into a single unif…
the amount that consumers have to spend to pay off their debt…
Leverage
the practice of using borrowed money to pay for investments
Subprime Mortgage
a mortgage loan made to a borrower with a low credit score
16 terms
Financial Crisis Review
Mortgage Backed Securities
Adjustable Rate Mortgages
Credit Default Swaps (CDO'S)
De-Regulation
A type of asset-backed security that is secured by a mortgage…
A type of mortgage in which the interest rate paid on the out…
A credit default swap is a particular type of swap designed t…
Bills, Attitudes changed in order to make getting a mortgage…
Mortgage Backed Securities
A type of asset-backed security that is secured by a mortgage…
Adjustable Rate Mortgages
A type of mortgage in which the interest rate paid on the out…
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