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Financial meltdown in usa


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SPENTREP F10 Special Report Financial Meltdown in the USA

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Financial meltdown in usa

  1. 1. Mark Alexander A. Salvador SPENTREP F10 Financial Meltdown in USA
  2. 2. The Story <ul><li>Major Events of the Decade </li></ul><ul><ul><li>Dot-com Bubble </li></ul></ul><ul><ul><li>9/11 Attacks </li></ul></ul><ul><ul><li>Afghan and Iraq Wars </li></ul></ul><ul><li>Effects on the Markets </li></ul><ul><ul><li>Slashed Interest Rates </li></ul></ul><ul><li>The China Factor </li></ul><ul><ul><li>Joined the WTO </li></ul></ul><ul><ul><li>Massive shift of global manufacturing to the nation </li></ul></ul><ul><ul><li>Low-cost Chinese goods flooded markets </li></ul></ul>
  3. 3. The Story <ul><li>Global Demand for Oil Boosted </li></ul><ul><li>US Trade Deficit </li></ul><ul><li>Investment Outlet was the USA </li></ul><ul><ul><li>Investors looked for safe-haven investments such as US Treasuries </li></ul></ul><ul><li>Subprime Mortgage </li></ul><ul><ul><li>A type of mortgage that is normally given to borrowers with low credit ratings. </li></ul></ul><ul><ul><li>Since the borrower has a lower rating, a conventional mortgage is not offered because the lender views the borrower as having a larger than average risk of defaulting. </li></ul></ul><ul><ul><li>Lenders often charge higher interest rates on subprime mortgages in order to compensate for carrying more risk. </li></ul></ul>
  4. 4. The Story <ul><li>Wall Street Produces Complex Securities </li></ul><ul><li>Individual Loans could be Securitized </li></ul><ul><li>Lenders could Originate Loans, Resell and Use the Proceeds to Make More Loans </li></ul><ul><li>Home Buying Spree </li></ul><ul><ul><li>Low Borrowing Costs </li></ul></ul><ul><ul><li>Easy Access to Credit </li></ul></ul><ul><li>Making Significant Returns through Buying and Selling </li></ul>
  5. 5. The Story <ul><li>Benefits </li></ul><ul><ul><li>Produced Jobs </li></ul></ul><ul><ul><li>House Becomes Largest Asset </li></ul></ul><ul><ul><li>Liquid </li></ul></ul><ul><li>Signs of the Bubble Burst </li></ul><ul><ul><li>Declining House Prices </li></ul></ul><ul><ul><li>High Interest Rates </li></ul></ul><ul><ul><li>Mortgages Could Not be Paid </li></ul></ul><ul><ul><li>Defaults </li></ul></ul><ul><ul><li>Markets of Mortgage-Backed Securities Shut Down </li></ul></ul>
  6. 6. Effects of the Fiasco <ul><li>Money Stopped Flowing </li></ul><ul><li>Banks Began Reporting Losses on their Mortgage-backed Holdings </li></ul><ul><li>Banks Shrank from Doing Business with Each Other </li></ul><ul><li>Insolvencies and Bailouts </li></ul><ul><ul><li>Bear Stearns </li></ul></ul><ul><ul><li>Fannie Mae & Freddy Mac </li></ul></ul><ul><ul><li>Lehman Brothers </li></ul></ul><ul><ul><li>AIG </li></ul></ul><ul><li>Effects </li></ul><ul><ul><li>Unemployment </li></ul></ul><ul><ul><li>Government Deficits </li></ul></ul>
  7. 7. Effects of the Fiasco <ul><li>Effects (continued) </li></ul><ul><ul><li>High Prices </li></ul></ul><ul><ul><li>Cost on Welfare </li></ul></ul><ul><ul><li>Depreciation of Currencies </li></ul></ul><ul><li>Philippines and the Rest of Asia </li></ul><ul><ul><li>Emerging Economies Performed Better </li></ul></ul><ul><ul><li>Benefits of a Conservative Banking System </li></ul></ul><ul><ul><li>High Population Fuelled Consumption </li></ul></ul><ul><ul><li>Currency Appreciated </li></ul></ul><ul><ul><li>USD Lost Some Purchasing Power </li></ul></ul><ul><ul><li>Local Goods and Services Became Expensive </li></ul></ul>
  8. 8. In Relation to Entrepreneurship <ul><li>The need to be updated </li></ul><ul><li>Greed is cancer </li></ul>
  9. 9. <ul><li>THE END </li></ul><ul><li>Thank You! </li></ul>
  10. 10. Bibliography <ul><li>Muinchau, Wolf. The Meltdown Years: The Unfolding of the Global Economic Crisis . United States of America: McGraw-Hill, 2010. </li></ul><ul><li>Zandi, Mark M. Financial Shock: a 360 look at the subprime mortgage implosion and how to avoid the next financial crisis . New York: FT Press, 2009. </li></ul><ul><li>“ Definition of Subprime Mortgage.” Investopedia . 23 February 2011 < >. </li></ul><ul><li>“ Ireland, Greece, Spain, Portugal: a Same European ‘Peripheral’ Problem?” Ireland after Nama. 26 February 2011 < >. </li></ul>
  11. 11. Bibliography <ul><li>“ The Lesson of Dubai: The Crisis is not Over.” Time. 26 February 2011 <,8599,1943392,00.html > </li></ul><ul><li>“ Q&A: Greece’s Financial Crisis Explained.” CNN. 26 February 2011 < > </li></ul><ul><li>“ The Fuel that Fed the Subprime Meltdown.” Investopedia. 23 February 2011 < > </li></ul>
  12. 12. Bibliography <ul><li>“ US Subprime Market.” Economy Watch. 26 February 2011 < > </li></ul><ul><li>“ What Caused the Subprime Mortgage Crisis.” 24 February 2011 < > </li></ul>