Global financial crisis and its consequences

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Global financial crisis and its consequences

  1. 1. Global financial crisis and its consequences<br />Benjamin Perraut <br />Benoit Giraud <br />Lucas fournet<br />
  2. 2. Outline<br /> 1 – Introduction  <br />2 – Causes of the Financial crisis<br />3 – The crisis and its spread<br />4 – Consequences <br />5 –Conclusion<br />
  3. 3. 1 – Introduction<br />Since summer, 2007, the international financial system crosses one of the gravest crises since 1929. The first signal is launched on July 17th by an American financial institution, Bear Stearns, who announces then the strong loss of value of its funds because of subprimes. However, the major event of this crisis which makes it tip over in crisis systematismis the bankruptcy of the investment bank Lehman Brothers, on September 14th, 2008.<br />This short summary illustrates the fragility of an internationalized financial system, where the effect of contagion is strong. <br />
  4. 4. 2 – Causes of the Financial crisis<br />
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  7. 7. 2 - The crisis and its spread<br />Securization :<br />The main reason for the spread of the crisisissecuritization.<br />The perceivedbenefits of securitization.<br />
  8. 8. 2 - The crisis and its spread<br />The reasons for the amplification of the crisis:<br />Moral hazard<br />Opaque securitization<br />Buying on credit<br />
  9. 9. 3 – Consequences of the crisis<br />Destruction of manyjobs, companies go bankrupt, declineof purchasingpower…etc.<br />An increase in aversion to risk<br />Consumption in the United States <br />Bank behavior<br />The fragility of the dollar <br />
  10. 10. Conclusion<br />increase of the unemployment,<br /> non repayment of bank loan, <br />lack of liquidity for  the companies<br />
  11. 11. <ul><li>In Amercia the Federal Reserve decided to spend $1.2 trillion on purchasing various financial assets and making emergency loans.
  12. 12. Strong government commitment to rescue the banks and the financial system
  13. 13. Regulation of the financial market : problem of conflict of interests</li></li></ul><li>Inside Job<br />By Charles <br />H. Ferguson<br />2010<br />

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