1. The Credit
Cruncher
tion by
esenta
A pr
l Eury
Michae

2. “The economy will never stop growing.........”

3. Anyone can buy a
house

4. Subprime mortgages
=
greater risk of default
a history of bad loans or defaults,
those with a recorded bankruptcy,
or limited debt experience

5. Sub-prime
mortgage
Sub-prime
mortgage
Sub-prime
mortgage
Sub-prime
mortgage
Sub-prime
mortgage

6. Bankers named these
“Collateralised Debt
Obligations!”
Note: Earlier name, “Worthless Junk”, was less popular with investors

7. A A A
rigorous analysis by ratings
agencies

8. US investment
banks are
prime movers
in these
transactions
(‘possibly’ not a real banker)

9. Banks,
governments,
businesses around
the world bought
these ‘rock solid’
assets

10. And on it went.......

11. Debt
assets
Debt
assets
Debts

12. Until one day, when........

13. Honeymoon periods on sub-prime
interest rates ended

14. Mortgage holders
couldn’t pay the
higher interest rate

16. ...instead of house $
outweighing the mortgage....

17. ...mortgage $ are greater
than a house’s worth!

18. for the unknowing buyers of
the Junk assets....
values and financial returns.....

19. are washed away

20. up to 100 US mortgage
lenders close down and....

21. Value
CDO’s (Junk assets)
!!

22. Established investment banks
become insolvent with a
great risk of more to come!

23. Commercial confidence
plummets

24. US Federal reserve
launches $700b
‘rescue’ package

25. Stockmarkets crash

26. no longer confined to the US

27. it’s now more like this!

28. (and politicians)
Economists don’t
quite know what to
do
“I’ll count to 10, then
everything will be all
right!”

29. “Whoops, forgot to
cross my fingers! I’ll
try again. 1, 2, 3.......”

30. www.stickylearning.com.au website
launching December 08 - bookmark it now!