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Armando Suarez, ArsenyLebedev, Joe Gunshor,  Rebecca Ryba, Jacob Turner, Joe Amelio, Nicole Rizzuto
Contents ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Nutshell
Banks Washington Mutual Barclays Capital Citigroup Lehman Brothers Merrill Lynch UBS
Businesses -30% Dow YTD ,[object Object],[object Object]
Households ~14 Million People ,[object Object],[object Object]
2006-2007
2008
What’s Wrong? ,[object Object],[object Object],[object Object]
Trade Account ,[object Object],[object Object],[object Object],[object Object],[object Object]
The Deficit ,[object Object],[object Object],[object Object]
Central Banks ,[object Object],[object Object],[object Object],[object Object],[object Object]
Central Banks and  Government-Controlled Bodies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
US as Center of Trade and Investment Flows ,[object Object],[object Object],[object Object],[object Object]
Not today… ,[object Object],[object Object]
Dollars not so attractive ,[object Object],[object Object],[object Object]
Asia ,[object Object],[object Object]
Wrong. ,[object Object],[object Object],[object Object],[object Object]
Gradual move away from the Dollar ,[object Object],[object Object],[object Object],[object Object]
The shift ,[object Object],[object Object]
The Great Depression ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
1968-1982 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Black Monday ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
2001 Recession ,[object Object],[object Object],[object Object],[object Object]
Home Prices
LIBOR Spreads
Market Volatility
Dollar Strengthening?
Future Prospects ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Is the Economic Shift Cyclical? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],In order to figure out how to tackle  a solution, we need understand what type of predicament we are in.
Worsened Cyclical Economic Shift Deep Recession  2008 ,[object Object],[object Object],[object Object],[object Object],[object Object]
An Atypical Cycle An  Atypical Cycle  Each of the past  six recessions  has been accompanied by a bear market, with the Standard & Poor's 500-stock index losing, on average, 31%. By that measure, the stock market's current decline -- with the S&P 500 down  43% from its peak -- is already worse than usual. Bigger the Bubble    Bigger Burst
Problem Areas 3 1 2
Resuming Our Economic Position ,[object Object],Home Prices  Unfreeze Credit Markets Decrease Unemployment  Restore Consumer Buying
Fixing Unemployment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Fixing Home Market These include an infusion of capital that would allow banks to step up their lending activity, Ms. Wachter, the University of Pennsylvania economist, said, and a restructuring of troubled mortgages in order to reduce the number of foreclosed homes flooding the market. If banks expect home prices to continue to tumble, they will be reluctant to lend, even if they have the capital to do so, and the number of people willing to buy a home will remain low. Problem :  Stop Downward spiral of home prices Solution :  Reduce Growing Inventory, Government help restructure loans to prevent defaults Problem  : Keeps banks  doors open to new investors Solution :  Bail out will take bad loans off books, which will  hopefully  unfreeze credit  markets due to reduce liabilities of banks
Increase GDP ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Thaw the Credit Markets  ,[object Object],Solution:   Bail Out: TARP Treasury taking Equity stakes down  Graph indicates banks and other financial institutions reluctance to lend  as compared to previous years, due to fear of defaults and illiquidity WSJ
Confident  Leadership  ,[object Object],[object Object],[object Object],[object Object],[object Object]
Despite Economic Downturn The Equity Market Moves Upward Hope for the Future
[object Object]
[object Object],[object Object],[object Object],Source: WSJ
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: WSJ

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Explaining the Financial Crisis

  • 1. Armando Suarez, ArsenyLebedev, Joe Gunshor, Rebecca Ryba, Jacob Turner, Joe Amelio, Nicole Rizzuto
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  • 5. Banks Washington Mutual Barclays Capital Citigroup Lehman Brothers Merrill Lynch UBS
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  • 40. An Atypical Cycle An Atypical Cycle Each of the past six recessions has been accompanied by a bear market, with the Standard & Poor's 500-stock index losing, on average, 31%. By that measure, the stock market's current decline -- with the S&P 500 down 43% from its peak -- is already worse than usual. Bigger the Bubble  Bigger Burst
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  • 44. Fixing Home Market These include an infusion of capital that would allow banks to step up their lending activity, Ms. Wachter, the University of Pennsylvania economist, said, and a restructuring of troubled mortgages in order to reduce the number of foreclosed homes flooding the market. If banks expect home prices to continue to tumble, they will be reluctant to lend, even if they have the capital to do so, and the number of people willing to buy a home will remain low. Problem : Stop Downward spiral of home prices Solution : Reduce Growing Inventory, Government help restructure loans to prevent defaults Problem : Keeps banks doors open to new investors Solution : Bail out will take bad loans off books, which will hopefully unfreeze credit markets due to reduce liabilities of banks
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  • 48. Despite Economic Downturn The Equity Market Moves Upward Hope for the Future
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