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Chapter 5 Current Multinational Financial Challenges:  The Credit Crisis  of 2007-2009
The Seeds of Crisis: Sub-Prime Debt ,[object Object],[object Object],[object Object],5- 0
The Seeds of Crisis: Sub-Prime Debt (cont’d) ,[object Object],[object Object],[object Object],5- 0
Deregulation ,[object Object],[object Object],[object Object],5- 0
The Housing Sector and Mortgage Lending ,[object Object],[object Object],5- 0
Credit Quality ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],5- 0
Credit Quality ,[object Object],[object Object],5- 0
Credit Quality ,[object Object],[object Object],[object Object],5- 0
Asset Values ,[object Object],[object Object],[object Object],[object Object],[object Object],5- 0
The Transmission Mechanism:  Securitization  ,[object Object],[object Object],[object Object],5- 0
Exhibit 5.2  Household Debt as a Percentage of Disposable Income,  1990-2008 5- 0
The Transmission Mechanism:  Securitization  ,[object Object],[object Object],[object Object],[object Object],5- 0
The Transmission Mechanism:  Securitization  ,[object Object],[object Object],[object Object],[object Object],5- 0
Exhibit 5.3  Securitized Loans Outstanding (trillions of U.S. dollars) 5- 0
Structured Investment Vehicles  begáIt]bkrN_EdlCarcnasm<½n§ ,[object Object],[object Object],[object Object],5- 0
Exhibit 5.4  Structured Investment Vehicles (SIVs) 5- 0
Collateralized Debt Obligations  ,[object Object],[object Object],[object Object],[object Object],5- 0
Collateralized Debt Obligations  ,[object Object],[object Object],[object Object],[object Object],5- 0
Exhibit 5.5  The Collateralized Debt Obligation  5- 0
Credit Default Swaps  ,[object Object],[object Object],[object Object],[object Object],[object Object],5- 0
Credit Default Swaps  ,[object Object],[object Object],[object Object],[object Object],5- 0
Credit Default Swaps  ,[object Object],[object Object],[object Object],5- 0
Credit Default Swaps  ,[object Object],[object Object],5- 0
Credit Enhancement  ,[object Object],[object Object],[object Object],[object Object],[object Object],5- 0
Subordination for Credit Enhancement in CDO Tranches  ,[object Object],5- 0
The Crisis of 2007 and 2008  ,[object Object],[object Object],[object Object],[object Object],5- 0
The Crisis of 2007 and 2008  ,[object Object],[object Object],5- 0
The Crisis of 2007 and 2008  ,[object Object],[object Object],[object Object],5- 0
Global Contagion  ,[object Object],[object Object],[object Object],[object Object],5- 0
Global Contagion  ,[object Object],[object Object],[object Object],[object Object],[object Object],5- 0
Mark-to-Market Accounting  emtUtKNnaKittMéltamTIpSar ,[object Object],[object Object],[object Object],[object Object],5- 0
What’s Wrong with LIBOR?    ¬[eKx©I sMrab;FnaKar¦ ,[object Object],[object Object],[object Object],5- 0
LIBOR’s Role  ,[object Object],[object Object],[object Object],5- 0
Exhibit 5.12  LIBOR and the Crisis in Lending 5- 0
LIBOR’s Role  ,[object Object],[object Object],[object Object],[object Object],5- 0
Exhibit 5.13  The U.S. Dollar TED Spread (July 2008–January 2009) 5- 0
LIBOR’s Elements  ,[object Object],[object Object],[object Object],[object Object],5- 0
LIBOR’s Elements  ,[object Object],[object Object],[object Object],[object Object],[object Object],5- 0
The Remedy: karBüa)al Prescriptions for an Infected Global Financial Organism  ¬mUlFnniym¦ ,[object Object],[object Object],5- 0
The Remedy: Prescriptions for an Infected Global Financial Organism  ,[object Object],[object Object],[object Object],[object Object],[object Object],5- 0
The Remedy: Prescriptions for an Infected Global Financial Organism  ,[object Object],[object Object],[object Object],[object Object],5- 0
The Remedy: Prescriptions for an Infected Global Financial Organism  ,[object Object],[object Object],[object Object],[object Object],[object Object],5- 0
The Remedy: Prescriptions for an Infected Global Financial Organism  ,[object Object],[object Object],[object Object],[object Object],5- 0
The Remedy: Prescriptions for an Infected Global Financial Organism  ,[object Object],[object Object],[object Object],[object Object],5- 0
The Remedy: Prescriptions for an Infected Global Financial Organism  ,[object Object],[object Object],[object Object],[object Object],5- 0
Mini-Case: Letting Go of Lehman Brothers  ,[object Object],[object Object],[object Object],5- 0
Additional Chapter Exhibits Chapter 5
Exhibit 5.1  U.S. Financial Assets as a Percent of GDP 5- [Insert Exhibit 5.1]
Exhibit 5.6  Global CDO Issuance, 2004–2008 (billions of U.S. dollars) 5- [Insert Exhibit 5.6]
Exhibit 5.7 Cash Flows under a Credit Default Swap 5-
Exhibit 5.8  Credit Default Swap Market Growth 5-
Exhibit 5.10  USD & JPY LIBOR Rates (September—October 2008) 5-
Exhibit 5.11  Selected Stock Markets during the Crisis 5-
Exhibit 5.14  Three-Month Money Market and Credit Spreads (Bank for International Settlements) in Basis Points 5-

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M05 eiteman0136091008 12_mbf_c05

  • 1. Chapter 5 Current Multinational Financial Challenges: The Credit Crisis of 2007-2009
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
  • 11. Exhibit 5.2 Household Debt as a Percentage of Disposable Income, 1990-2008 5- 0
  • 12.
  • 13.
  • 14. Exhibit 5.3 Securitized Loans Outstanding (trillions of U.S. dollars) 5- 0
  • 15.
  • 16. Exhibit 5.4 Structured Investment Vehicles (SIVs) 5- 0
  • 17.
  • 18.
  • 19. Exhibit 5.5 The Collateralized Debt Obligation 5- 0
  • 20.
  • 21.
  • 22.
  • 23.
  • 24.
  • 25.
  • 26.
  • 27.
  • 28.
  • 29.
  • 30.
  • 31.
  • 32.
  • 33.
  • 34. Exhibit 5.12 LIBOR and the Crisis in Lending 5- 0
  • 35.
  • 36. Exhibit 5.13 The U.S. Dollar TED Spread (July 2008–January 2009) 5- 0
  • 37.
  • 38.
  • 39.
  • 40.
  • 41.
  • 42.
  • 43.
  • 44.
  • 45.
  • 46.
  • 48. Exhibit 5.1 U.S. Financial Assets as a Percent of GDP 5- [Insert Exhibit 5.1]
  • 49. Exhibit 5.6 Global CDO Issuance, 2004–2008 (billions of U.S. dollars) 5- [Insert Exhibit 5.6]
  • 50. Exhibit 5.7 Cash Flows under a Credit Default Swap 5-
  • 51. Exhibit 5.8 Credit Default Swap Market Growth 5-
  • 52. Exhibit 5.10 USD & JPY LIBOR Rates (September—October 2008) 5-
  • 53. Exhibit 5.11 Selected Stock Markets during the Crisis 5-
  • 54. Exhibit 5.14 Three-Month Money Market and Credit Spreads (Bank for International Settlements) in Basis Points 5-