18. The financial crisis of 2007 began in the United States with
the subprime crisis, but this domestic crisis quickly spread beyond
the US. Describe (don’t just list) the FOUR reasons presented for
why this crisis became global, in other words the four reasons for
the rapid international contagion of the subprime crisis.
*The 2007 – 2009 Financial Crisis began with:
A.
defaults on subprime mortgages.
B.
commercial banks losing their excess reserves.
C.
hedge funds going bankrupt.
D.
a sharp increase in the federal funds rate.
*Proposals for future financial reform include:
A.
a general rule to allow financial markets participants to
conduct their business in an unconstrained manner
B.
rules to increase excessive risk taking
C.
less regulation for nonbank financial institutions
D.
policies to prevent institutions from becoming “too big...
Give an overview of the financial crisis: the use of
subprime mortgages, mortgage backed securities and CD Swaps; the
failure of Bear Stearns and the government’s intervention; the
failure of Lehman Brothers and the government’s refusal to
intervene; how the government bailed out AIG (discussing what AIG
did that made it vulnerable and in need of a bailout – why it was
“too big to fail”); and the government’s capital infusion of the
banking system (discussing what the government did...
Explain how the financial crisis of 2007-2009 that originated in
the real estate market and mortgage markets hurt financial
intermediaries' attempts to use diversification to limit the
riskiness of their loans.
Greedy investing in subprime mortgage securities caused the
financial crisis of 2008. Explain why the first sentence is true
(or explain why you disagree if you think it is not true). How did
subprime mortgages in the U.S. become a worldwide financial issue?
Did any of you suffer as a result of the financial crisis of 2008 (
or your parents, if that is a more age appropriate question).
I'll start: I tried to sell my house during the financial...
Read through the material provided on how the Federal Reserve
responded to the subprime mortgage crisis and consequent 2008-09
recession with monetary policy. Now, answer this: Do you support
what the FED did in theory and practice? In particular, discuss
your take on the series of quantitative easing measures we have
witnessed since the crisis and the recent changes in FED outlook.
Do you believe it is too early to raise interest rates by
tightening money supply, or do you...