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The Financial Ripple (2007 - 2013)- As It Happened
 

The Financial Ripple (2007 - 2013)- As It Happened

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The ripple effect of the financial downturn spread across nations from 2007. The intensity of financial shock from US Subprime Mortgage Crisis was so large that it caused Europe to witness a falling ...

The ripple effect of the financial downturn spread across nations from 2007. The intensity of financial shock from US Subprime Mortgage Crisis was so large that it caused Europe to witness a falling economy. Through out 2009 till 2013 Eurozone has been facing a fluctuating economy causing serious concerns over rising unemployment and failure to revive the sleeping economy. In 2013, Asia Pacific faces serioius concerns with China, Japan & India falling slowly in the financial trap.The falling rupee, tumbling asian stock markets and a high food inflation are causing grave concerns over asian economies.

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    The Financial Ripple (2007 - 2013)- As It Happened The Financial Ripple (2007 - 2013)- As It Happened Presentation Transcript

    • 10% 80% The ripple effect of the financial downturn spread across nations from 2007. The intensity of financial shock from US Subprime Mortgage Crisis was so large that it caused Europe to witness a falling economy. Through out 2009 till 2013 Eurozone has been facing a fluctuating economy causing serious concerns over rising unemployment and failure to revive the sleeping economy. In 2013, Asia Pacific faces serioius concerns with China, Japan & India falling slowly in the financial trap.The falling rupee, tumbling asian stock markets and a high food inflation are causing grave concerns over asian economies. UK & Eurozone 2009 USA 2007 Asia Pacific 2012 © 2013 Deena Zaidi. All Rights Reserved. FINANCIAL CRISIS – The Financial Ripple
    • © 2013 Deena Zaidi. All Rights Reserved. 9th August 2007 BNP Paribas freezes three of their funds, indicating that they have packages of sub- prime loans 14th September 2007 Northern Rock faces liquidity crisis and was the first run on a British bank in 150 years. 24th Jan 2008 Largest single year drop in US home sales 14th March 2008 Bear Stearns is bought by JP Morgan and was the „Crisis Trigger‟ The Beginning of the Crisis- USA (2007-2008)
    • The Global Meltdown continues……. 7th September 2008 US government bailed out Fannie Mae and Freddie Mac, that had guarantee thousand of Subprime mortgages 15th September, 2008 Lehman Brothers file for bankruptcy prompting first worldwide panic 17th September,2008 HBOS, UK‟s largest lenders are rescued by Lloyds TSB after a huge drop in share price 21st September 2008 Goldman Sachs and JP Morgan Chase mark an end to investment banking model and change their status to banking holding companies © 2013 Deena Zaidi. All Rights Reserved.
    • A TALE OF TWO BIG COLLAPSES 30th September 2008 Irish government promises to underwrite entire Irish banking system. 7-8th October,2008 Iceland‟s biggest banks- Glitnir, Kaupthing and Landsbanki collapse 8th October,2008 Eight central banks including the Bank of England, the European Central Bank, and the Federal Reserve cut their interest rates by 0.5% in a coordinated attempt to ease the pressure on borrowers 13th October, 2008 British government bails out several banks including Royal Bank of Scotland, Lloyds TSB, HBOS. 14th November,2008 G20 meets for the first time since Lehman‟s went under that was compared in significance to the Brettons Woods summit in 1944 © 2013 Deena Zaidi. All Rights Reserved.
    • © 2013 Deena Zaidi. All Rights Reserved. 2 April 2009 • The G20 agrees on a global stimulus package worth $5tn 10 October 2009 • George Papandreou's socialist government is elected in Greece. Just over a week later, he reveals that the hole in Greece's finances are double what was previously feared 27 April 2010 • Greek debt is downgraded to junk 2nd May,2010 • In a move that signals the start of the Eurozone crisis, Greece is bailed out for the first time, after Eurozone finance ministers agree loans worth €110bn. This intensifies the austerity programme in the country, and sends hundreds of thousands of protesters to the streets 19th July 2010 • Ireland debt downgraded by Moody‟s 28th November 2010 • European ministers agree a bailout for Ireland worth €85bn Bailouts & Downgrading
    • © 2013 Deena Zaidi. All Rights Reserved. 5 May 2011 The ECB bails out Portugal 21 July 2011 Having failed to get its house in order, Greece is bailed out for a second time 5 August 2011 S&P downgrades US sovereign debt 13th January 2012 S &P downgrades France and eight other Eurozone countries 16th January 2012 EU bailout fund, The European Financial Stability Facility, also downgraded 12 February 2012 Greece passes its most severe austerity package yet 22nd February,2012 Eurozone Service Sector shrinks raising fears of recession in Eurozone 12 March 2012 The number of unemployed Europeans reaches its highest ever level
    • © 2013 Deena Zaidi. All Rights Reserved.  Italian Borrowing costs increase  Euro-zone faces double- dip recession  Spain’s fourth largest bank ,Bankia, says it has asked for a government bailout  Spanish house prices drop.  France refuses to back Greece’s call for more time to enact reforms  Spain’s most populous region becomes latest to request for financial help from Madrid  Eurozone demands six day week for Greece  Germany's highest court approves creation of euro rescue fund  EU under pressure to relax terms on Greece's €130bn bailout as critics warn of 1930s-style Great Depression  Britain emerges from the double dip recession  Eurozone unemployment hits a new high  Cyprus becomes the fourth EU country to ask for bailout  More austerity after Ireland budget Eurozone: FINANCIAL CRISIS – ECONOMIC MELTDOWN - 2012
    • © 2013 Deena Zaidi. All Rights Reserved
    • © 2013 Deena Zaidi. All Rights Reserved.
    • 10% © 2013 Deena Zaidi. All Rights Reserved. . Arrival of the FINANCIAL CRISIS In Asia – 2013 Asia: Gold slumps to a two-year low as China GDP falls to 7.7% UK : UK credit rating downgraded US: US jobless rate falls to four-year low as EC cuts euro-zone growth forecast. Eurozone:  German parliament approves Cyprus bailout as Germany‟s private sector shrinks  Osborne calls on central banks to drive recovery at G7,  Bailout payments for Cyprus and Greece  France sinks back into recession
    • 10% . Disclosure of Banking Scandals amidst the financial Crisis– 2013  Abenomics: PM Shinzo Abe's stimulus package proposes to end the two decades of stagnant growth in Japan. Japan's strong growth figures show Europe the way  IMF urges Greece to keep reforming, as EC risks trade war with China  Eurozone crisis: IMF admits mistakes over Greece bailout  RBS boss in shock resignation  Former UBS and Citigroup trader charged over Libor-rigging scandal © 2013 Deena Zaidi. All Rights Reserved.
    • FINANCIAL CRISIS – ECONOMIC MELTDOWN-2013 © 2013 Deena Zaidi. All Rights Reserved. In 2013, Asia started witnessing serious effects of the crisis felt all across Eurozone, UK & US. The repercussions faced in Asian markets are strong and evident enough to say that the region is heading for a meltdown and measures need to be taken. Below are some important events that took place and showed that Asia faces challenging and tough financial times: 1. Asia contemplates a sharp depreciation of their currencies, following the sudden outrush of foreign investors, triggered by the US Fed‟s signalling last week of a tighter monetary 2. Basel III package for bank regulation to reform the capital, leverage and liquidity regulations on banks reflecting the lessons of the crisis 3. The Indian rupee fell for a second session on July,2,2013, as state-run banks bought dollars to meet the government's defense needs and on continued worries that foreign investors would continue to exit domestic markets.
    • Too Big to Fail The crisis proved that there is never any bank that is too big to fail since some of the largest banks failed or were bailed out. Too Big to fail‟ is a clear concept asserting that certain financial concerns are too large and well connected to fall apart and incases when this occurs the government should step in to bail them out. Shadow Banking Can destabilize the financial system reinforcing the need to more effectively regulate it. Many “shadow bank”-like institutions and vehicles have emerged in American and European markets, between the years 2000 and 2008, and have come to play an important role in providing credit across the global financial system. Shadow banks can also cause a buildup of systemic risk indirectly because they are interrelated with the traditional banking system via credit intermediation chains, meaning that problems in this unregulated system can easily spread to the traditional banking system. © 2013 Deena Zaidi. All Rights Reserved.
    • © 2013 Deena Zaidi. All Rights Reserved. Cross Border Banking The huge & complex structures made it difficult to determine the risk lay and how it would transmitted. Cross border banking transmitted the crisis ferociously across national jurisdictions, from the sub-prime US markets to financial markets around the world. Foreign banks were operating as branches rather than locally incorporated subsidiaries highlighting the importance of countries making an explicit determination of the mode of presence of foreign banks in the form of branch or subsidiary. OTC derivatives market OTC derivatives market outpaced the regulatory regimes. Excessive bilateral exposures with insufficient collateralization + the inability of the market participants to price and value the derivatives + insufficient risk assessment, complexity and opacity of the products traded = to brew the crisis to explosive proportions because of the interconnectedness of the OTC derivatives market participants.
    • 10% FINANCIAL CRISIS – An Opinion Global Economics Crisis arises due to many reasons , one of the biggest being lack of banking ethics. Massive leverage, poor risk controls , rise of shadow banking and global connection to risky banks and products led to a further breakdown. Initial stages of the collapse reflect a certain disregard of banking ethics but after the financial epidemic, it seemed there was a complete and total collapse of ethical behavior amongst leading banks. A total lapse in the financial system is due to lack of responsibility amongst banks especially towards its customers. The crisis proved to show a lack of fiduciary responsibility towards the ultimate clients. The subprime mortgage crisis was an unethical scandal that turned into an unfathomable crisis. When it got global, countries took actions that either were to save their member countries or keep investors‟ confidence intact in their concerned market. One of the largest and by far the longest crisis still continues but what is still being missed is the „ethical‟ part which needs to be across the board from the banks‟ executives to its employees. This behavior needs to be both exemplified and enforced by top executives in the financial industry, placing client interests far above the compensation interests of its own executives. A close watch and timely action is required in order to avoid further breakdown. Conflict of interests need to be avoided especially if the crisis is globally connected. People involved in banking scandals need to be faced with rigor punishment since market sentiments are hurt in such cases and leads to a turmoil which further ruins matters. © 2013 Deena Zaidi. All Rights Reserved.