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Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
Sunus Teknikleri
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Sunus Teknikleri

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Great Depression …

Great Depression
Seher Hakan

Published in: Business, Economy & Finance
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  • 1. GREAT DEPRESSION AND SUBPRIME MORTGAGE CRISIS SEHER HAKAN
  • 2. CONTENT <ul><li>How Great Depression started? </li></ul><ul><li>Causes of Great Depression </li></ul><ul><li>Causes of Subprime Mortgage Crisis </li></ul><ul><li>How Crisis Spread All Over The World </li></ul><ul><li>Basic Differences </li></ul><ul><li>Conclusion </li></ul>
  • 3. How Great Depression Started? <ul><li>Black Thursday on 24 th of October 1929 </li></ul><ul><li>Started with Great Crash of Stock Market </li></ul>
  • 4. Numbers of Crisis <ul><li>Real GDP fell 30% </li></ul><ul><li>Industrial production declined 47% </li></ul><ul><li>Wholesale price index fell 33% </li></ul><ul><li>Unemployment rate increased 25% </li></ul>
  • 5. Table
  • 6. Causes of GDP <ul><li>Stock Market Crash </li></ul><ul><li>Banking and Monetary Contraction </li></ul><ul><li>Gold Standard </li></ul><ul><li>International Lending and Trade </li></ul>
  • 7. Stock Market Crash <ul><li>In 1929, US stock price tripled </li></ul><ul><li>Panic selling </li></ul><ul><li>October 1929, stock price decreased by 33% </li></ul>
  • 8. Stock Market Crash <ul><li>Aggregate demand decreased. </li></ul><ul><li>Business investment decreased. </li></ul><ul><li>People feel poorer. </li></ul>
  • 9. Banking and Monetary Contraction <ul><li>Banking panic </li></ul><ul><li>Money supply decreased </li></ul><ul><li>Lose confidence </li></ul>
  • 10. Banking and Monetary Contraction <ul><li>20% of the banks went bankrupt </li></ul><ul><li>Interest rates increased </li></ul>
  • 11. Gold Standard <ul><li>The UK abandon the gold standard. </li></ul><ul><li>The Great Depression widen to the world because of gold standard. </li></ul>
  • 12. International Lending Trade <ul><li>Lending rate decreased </li></ul><ul><li>Trade decreased </li></ul>
  • 13. Mortgage Types <ul><li>Prime </li></ul><ul><li>Subprime </li></ul>
  • 14. Causes of Subprime Mortgage Crisis <ul><li>Boom and burst in US housing market </li></ul><ul><li>Speculation </li></ul><ul><li>Securitization </li></ul><ul><li>Financial innovation </li></ul>
  • 15. Boom and Burst in US Housing Market <ul><li>Housing prices decreased. </li></ul><ul><li>Value of mortgage back asset decreased. </li></ul>
  • 16. Speculation <ul><li>Interest only adjustable rate mortgage </li></ul><ul><li>Easily given up houses </li></ul><ul><li>NINA people </li></ul>
  • 17. Securitization <ul><li>Distribute risk </li></ul><ul><li>Issue new securities </li></ul>
  • 18. Financial Innovation <ul><li>Offsetting risk exposure </li></ul>
  • 19. How Crisis Spread All Over the World? <ul><li>Credit Channel (Narrowed Economic Activity) </li></ul><ul><li>Portfolio Investment Channel (Global Liquidity) </li></ul>
  • 20. How Crisis Spread All Over the World? <ul><li>Foreign Trade Channel (Tourism, Real Estate Sale) </li></ul><ul><li>Negative Impacts of Expectation (Panic, Demand) </li></ul>
  • 21. Basic Differences <ul><li>Gold Standard </li></ul><ul><li>Credit-portfolio investment </li></ul><ul><li>Foreign trade </li></ul><ul><li>Globalisation </li></ul><ul><li>Negative expectation </li></ul>
  • 22. Basic Differences <ul><li>In 1929 - Tax and tariffs increased. </li></ul><ul><li>In 2008 - Recapitalization </li></ul>
  • 23. Conclusion-What we learnt? <ul><li>Interest rates fall during crisis. </li></ul><ul><li>There must be harmony between fiscal and monetary policy. </li></ul>
  • 24. Any Questions?
  • 25. <ul><li>THANKS FOR YOUR </li></ul><ul><li>ATTENTION… </li></ul>

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