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Presented by:
Hina Yunus
Moeed Sadiq
Introduction
In this presentation we will talk about
the global financial crises of 2007-08
and the role of loans in it.
This financial crises started out from
America and spread around the globe.
It is considered the worst crisis after
the Great Depression of 1930s.
Its main cause is the combination of
debt and mortgage-backed assets.
History
History
History
Taxpayers
Starting Point
What is sub-prime
lending?
Causes of crisis
1
Relaxation in lending
regulations
Poor credit worthiness of
borrowers
Impacts of Subprime
crisis
Major banks suffered from huge
losses.
2. Lehman brothers went out of
business.
3. Merill Lynch had to sell itself to bank
of America.
4. In Sept 2008, AIG collapses as it
could not afford to pay for all of these
US mortgage defaults. The US
government nationalised AIG by
becoming 80% shareholder.
1.
Financial Institutions--Bankruptcy
Financial Institutions---Writedowns
Citigroup
Merrill Lynch
UBS AG
Morgan Stanley
Credit Agricole
HSBC
Bank of America
CIBC
Deutsche Bank
The total write downs and losses were around $300$350 billion.
Domino effect
1
Economic Crisis
4
5
Job loss
Low consumer spending
Recession
Deflationary Spiral
Layoffs
and wage
reductions
Falling
Demand
Bankruptci
es
Falling
Prices
Debt
Defaults