Presentation at Texas Christian University\'s AddRan Festival Of Undergraduate Scholarship and Creativity, April 2009 and winner of TCU\'s Economic Department Award to Best Presentation in Economics.

1. The Financial Crisis of 2007: A Multidisciplinary Approach Toward Its Understanding By Carlos Valera April 16, 2009

2. Defining the Financial Crisis of 2007 Collapse of Financial Markets and Banking System Massive Rise in Defaults in Home Mortgages Underwriting of Debt, Decapitalization of Banks Credit Crunch Lower Gross Domestic Product for 2008 (1.1% growth) Less Investment/Production Layoffs Less Available Income/Credit for Expenses Businesses Lower Consumption, Bigger Cash Savings Households Businesses Households Businesses Households caused by

4. Main Thesis Conditioned by Exacerbated by Misleading economic information on housing and financial markets Greater socio-political goal of Homeownership Distorted speculative consumer and investor behavior Low Federal Funds Interest Rates

5. Multidisciplinary Approach American Dream Concept Boost Homeownership rates, especially among Minorities Legislation Lenient Lending Standards Increased Demand for Housing Rising expectations of House Prices Creation of Profitable Financial Instruments Excessive and Continuous Mortgage Borrowing Boosted by Low Interest Rates Sociological Political Psychological Economic Multidisciplinary Approach

6. Sociological Perspective

8. Political Perspective

9. Why is Homeownership important?

14. Homeownership rates per State

15. Psychological Perspective

16. Speculation on Housing Prices

17. Economic Perspective

18. Profitable Financial Instruments: Mortgage-Backed Securities Mortgage B Mortgage A Mortgage C Mortgage Pool Mortgage-Backed Security Mortgage-Backed Security Mortgage-Backed Security Asymmetrical, More Risk Symmetrical, Less Risk

19. Low Interest Rates: A “Liquidity Party”?

20. Conclusions

21. What went wrong? American Dream Concept Boost Homeownership rates, especially among Minorities Legislation Lenient Lending Standards Increased Demand for Housing Rising expectations of House Prices Creation of Profitable Financial Instruments Excessive and Continuous Mortgage Borrowing Boosted by Low Interest Rates Sociological Political Psychological Economic