The document discusses the subprime mortgage crisis and its effects. It provides background on subprime loans and why they are issued. It then explains the key events that triggered the crisis from 2000-2008, including low interest rates, rising home prices, and many subprime borrowers defaulting as rates increased. This led to a collapse of the mortgage-backed securities market and global recession. India was also impacted through declines in exports, stock markets, FDI, and other economic indicators from 2007-2009. However, India was less affected due to stronger banking regulations and less reliance on subprime-style lending.
I made this when I was in third year of my college.
This was my attempt to describe the subprime mortgage crisis that lead to the financial meltdown in 2008.
Read this Sample Report on "A Study on Subprime Mortgage Crisis", written by a professional writer of Instant Assignment Help. We offer free assignment samples to the students drafted by academic experts. We provide top quality assignments to the scholars which helps them in achieving perfect grades in their academics. If you are facing any problem in writing your assignments then contact us to get the best assignment help online in UK. Place your order now to get upto 50% discount + 5% cash back.
Bubble spotting - Subprime Mortgage crisis / Housing bubble 2007-2008Benjamin Van As
In the early to mid 2000s a housing bubble was created due to easy access to credit. The fall-out once investment bubble popped nearly brought the banking sector to its knees
This short presentation (part of a series on bubbles) explained what happened
I made this when I was in third year of my college.
This was my attempt to describe the subprime mortgage crisis that lead to the financial meltdown in 2008.
Read this Sample Report on "A Study on Subprime Mortgage Crisis", written by a professional writer of Instant Assignment Help. We offer free assignment samples to the students drafted by academic experts. We provide top quality assignments to the scholars which helps them in achieving perfect grades in their academics. If you are facing any problem in writing your assignments then contact us to get the best assignment help online in UK. Place your order now to get upto 50% discount + 5% cash back.
Bubble spotting - Subprime Mortgage crisis / Housing bubble 2007-2008Benjamin Van As
In the early to mid 2000s a housing bubble was created due to easy access to credit. The fall-out once investment bubble popped nearly brought the banking sector to its knees
This short presentation (part of a series on bubbles) explained what happened
pictorial representation of sub prime crisis. How sub prime crisis happened. Simple and easily understood way. Investment banking,motgages,how it backfired,snapshot of subprime crisis 2008,explanation of subprime crisis,.Why real estate sector lost its boom in US.
The global financial crisis, brewing for a while, really started to show its effects in the middle of 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.
On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns.
This presentation provides an overview of the crisis with links for further, more detailed, coverage at the end.
A crisis so severe, the world financial system is shaken…
Attached is a wonderful presentation by the wizard financial analyst and writer Arif Anees. Hope you'd all relish this rare stuff..
pictorial representation of sub prime crisis. How sub prime crisis happened. Simple and easily understood way. Investment banking,motgages,how it backfired,snapshot of subprime crisis 2008,explanation of subprime crisis,.Why real estate sector lost its boom in US.
The global financial crisis, brewing for a while, really started to show its effects in the middle of 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.
On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns.
This presentation provides an overview of the crisis with links for further, more detailed, coverage at the end.
A crisis so severe, the world financial system is shaken…
Attached is a wonderful presentation by the wizard financial analyst and writer Arif Anees. Hope you'd all relish this rare stuff..
Martine Rainville – Le droit d’auteur appliqué aux blogues Made in
Le contenu des blogues est roi et il est diffusé sur toutes les plateformes. Donc, est-ce possible de protéger le contenu de son blogue ? Si oui, comment ?
Également, s’inspirer des autres, sans plagier : ou tracer la ligne ? Et quels sont les règles d’or à suivre.
Finalement, quels sont les recours légaux possibles dans le contexte où son blogue est plagié et où il y a violation du droit d’auteur ? C’est à toutes ces interrogations que Martine répondra lors de sa conférence.
The recession that began in the late 2000s was, to date, the worst economic downturn in the United States since the Great Depression. They didn't call it the "Great Recession" for nothing.
After the storm- Global Financial Crisis 27 aug 2010Gaurav Sharma
Global Financial Order - Reasons for Crisis, Current Status, The BIG Shifts- Public Debt, Global De-leverage, Wealth Concetration & Creation.
Talk Delivered at Fore School Of Management, new Delhi
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
1. Group 2: TYBBA A
Abhilasha Mohan Ram A003
Mayank Beria A025
MihirMandrekar A026
Monil Shah A027
Rohan Negi A035
ZoyaKazi A053
2. Meaning of Subprime :
The word means subordinate to primary
It is the loan given to people with a bad credit
rating who are not eligible for Prime loan ( normal
loans )
Characterized by higher interest rates, poor
quality collateral, and less favorable terms in
order to compensate for higher credit risk
Sub-prime lending may be utilized for sub-prime
mortgages, sub-prime car loans, sub-prime
credit cards etc.
3. Why are Subprime loans issued ?
For banks to earn more money by tapping the
defaulting customers
For young people who do not have enough money
for down payment
For people having financial problems
For people who are discriminated against
4. The US subprime mortgage crisis was a set of events and conditions that led to a
financial crisis and subsequent recession that began in 2008
Characterized by a rise in the inability to pay housing mortgages resulting in the
decline of securities backed by mortgages
These mortgage-backed securities (MBS) initially offered attractive rates of return
However, the lower credit quality ultimately caused massive defaults
The money was sucked out of several banks, financial institutions and the
economy as a whole in September 2008
Several European and developing countries had invested heavily in American
banks
The subsequent loss of funds resulted in the Global Recession of 2008
5. 2000-2005 :
Very low interest rates, property prices were on a
rising trend and the sub prime borrowers were able
to meet their obligations by selling the properties
or getting the properties refinanced
This created what is called ‘The Housing Bubble’
6. 2005-2006 :
The housing bubble burst during this time,
triggering the crisis
There was a steep fall in housing prices
The interest rates on subprime loans however were
high and were rising
The subprime borrowers were not able to meet
their liabilities leading to meltdown of the US
subprime industry
7. 2006-2008 :
More subprime borrowers failed to pay their debts
Securities held by mortgages lost value globally
Global investors also drastically reduced purchases
of mortgage-backed debt and other securities
8. The global recession of 2008-2009 :
Concerns about the soundness of U.S. credit and
financial markets led to tightening credit around
the world and slowing economic growth in the U.S.
and Europe
The U.S. entered a deep recession, with nearly 9
million jobs lost during 2008 and 2009
This recession was second to only ‘The Great
Depression of the 1920’s’ resulting in huge losses
9.
10.
11. Owning a home is part of the 'American Dream'. It
allows people to take pride in a property and engage
in a community for the long term.
However, homes are expensive and most people need
to borrow money to get one.
The conditions were right for people to achieve that
dream. In the early 2000s, mortgage interest rates
were low, which allow you to borrow more money
with a lower monthly payment. In addition, home
prices increased dramatically, so buying a home
seemed like a sure bet.
Lenders understood that homes make good collateral
so they were willing to participate.
The mortgage crisis was triggered as this situation
built momentum.
12. DOT COM COLLAPSE – 2000
SEPTEMBER 11 TERRORIST ATTACK
16. The housing bubble began to burst in late
2005
Since the end of 2005, default rates on
subprime mortgages have soared from 6.5%
to 17%, while foreclosure rates have jumped
from 2.5% to 9%.
17. When house prices ceased rising in mid 2006
and then started falling, subprime mortgage
defaults began accelerating.
Effects
Sub prime borrowers
Financial institutions
Banks
18. On December 1, 2008, the National Bureau of
Economic Research announced that the economy
had entered into a recession in December of
2007. Real GDP increased by only 0.4 percent for
the year 2008, and it decreased at annual rates of
5.4 percent in the 4th quarter of 2008 and 6.4
percent in the 1st quarter of 2009. The
unemployment rate increased from 4.9 percent in
December of 2007 to 9.5 percent in June of
2009.
The total real estate equity in The United States
was valued at $13 trillion during the 2006 peak,
had fallen to $8.8 trillion by mid 2008.
19.
20.
21. The people who contributed to the deadly chain
of events that sent the entire world economy into
recession.
22. Continued
Reduction in Fed
Rates
Sudden increase in
Money supply
Rates remained low
till 2005
High Liquidity
23. Lowered to lending rates to increase loan off
take
As the prime market was nearing saturation,
began lending to subprime borrowers
Aggressively sold MBS, CDO
Additional funds raised by securitization was
re-deployed in the same manner
25. Buying property well beyond their means
Buying for price arbitrage
Non-traditional mortgages leveraged their
borrowing capacity further
2yrs fixed rate, then floating rates: EMIs rose
exuberantly, house value fell
Thus making foreclosure a viable option
Accelerated downward spiral
26. Increased use of Secondary mortgage market
Lenders sold their mortgages in the
secondary market
Pooled mortgages into securities like CDOs
and MBS
27. Investors:
Investors were the ones willing to purchase
these CDOs at ridiculously low premiums over
Treasury bonds.
These enticingly low rates are what ultimately
led to such huge demand for subprime loans.
28.
29. Fuelled volatility through credit arbitrage
Credit Default Swaps
Influenced banks to bring out more MBS &
CDOs as it was a good avenue to invest in
32. Year Growth (US$ Bn)
2006-07 22.6
2007-08 29.0
2008-09 13.7
2009-10 -3.6
2010-11 29.5
15 per cent of total export in 2006-07 was directed toward
USA.
Official statistics released on the first day of the New Year,
showed that exports had dropped to $1.5 billion in
November 2008, (Sivaraman, 2008) from $12.7 billion a year
ago.
Manufacturing sectors like leather, textile, gems and
jewellery got hit hard.
36. Month Open High Low Close
January 20325.27 21,206.77 15,332.42 17468.71
February 17820.67 18,895.34 16,457.74 17578.72
March 17227.56 17,227.56 14,677.24 15644.44
April 15771.72 17,480.74 15,297.96 17287.31
May 17560.15 17,735.70 16,196.02 16415.57
June 16591.46 16,632.72 13,405.54 13461.60
July 13480.02 15,130.09 12,514.02 14355.75
August 14064.26 15,579.78 14,002.43 14564.53
September 14412.99 15,107.01 12,153.55 12860.43
October 13006.72 13,203.86 7,697.39 9788.06
November 10209.37 10,945.41 8,316.39 9092.72
December 9162.94 10,188.54 8,467.43 9647.31
Source: http://www.bseindia.com/indices/indexarchivedata.aspx
37. Against a net inflow of US$20.3 billion in FY2007–2008,
there was a net outflow of US$15 billion from Indian
markets during FY2008–2009 as foreign portfolio
investors sought safety and mobilized resources to
strengthen the balance sheet of their parent companies.
With Indian stocks melting under the heat of a global
crisis, overseas investors pulled out three dollars in
2008 from every four pumped in the previous year.
A major chunk of FII of over $3 billion had taken place
in October 2008 alone, which saw the Sensex going to
its lowest level in the last three years.
38. Year No. of
IPOs
Amt
Raised (in
Rs. Cr)
Issue
Succeede
d
Issue
Failed
2007 108 33,946.2
2
104 04
2008 39 18,339.9
2
36 03
2009 22 19,306.5
8
21 01
2010 66 36,362.1
8
64 02
IPO Report - Year Vs. Money raised through IPOs
39. only US$18 billion raised in FY2008–2009 as commercial credit from
the overseas market=41% less than the amount raised in the
previous year.
ECB approvals declined from US$3 billion in September 2008 to less
than US$0.5 billion in February 2009.
For the first time in last six years, FDI inflows witnessed a negative
growth of 2% in FY2008–2009.
Year Inflow
FDI 2004-05 US$6Bn
2007-08 US$34.3Bn
ECBs 2004-05 US$9Bn
2007-08 US$30.3Bn
FDI & ECBs
40.
41.
42. Dec 30th : 1USD =48INR
Jan 1st : 1USD =39INR Dec 1st : 1USD=50INR
43.
44. India’s Real estate market was very similar to
that of the U.S in 2008.
Housing developments were sprouting up
everywhere.
Plenty of money flowing into India, mainly
from private equity and hedge funds, to fuel
the commercial real estate bubble in
particular.
Carlyle, Blackstone, Citibank — they were all
here, throwing money at developers
45. 70% of the banking system in India is
nationalized, so RBI’s role as a strong
regulator is critical.
Indian banks were not levered like American
banks.
Capital ratios here are 12% and 13%, instead
of 7% or 8% of the Americans.
46. Banks Capital Adequacy
Ratio during
2007-08
Federal Bank
Oriental Bank of Commerce
Barclays Bank
Corporation bank
Kotak Mahindra Bank
Allahabad Bank
Bank of India
ICICI bank
Citi Bank
Axis Bank
Indian Overseas Bank
HFDC bank
22.5%
12.1%
21.1%
12.1%
18.7%
12.0%
12.0%
14.0%
12.0%
13.7%
12.0%
13.6%
47. Indian banks don’t do interest-only or
subprime loans.
Never gave more money to a borrower
because the value of the house had gone up.
Non performing loans are less than 1 %.
Mortgage loans tend to have down payments
in India that are 1/3rd of the purchase price.
Lets not talk about those prevailing in the
United states!
48.
49. He started sensing that real
estate, in particular, had
entered bubble territory before
the crisis.
One of the first moves he
made was to ban the use of
bank loans for the purchase of
raw land.
Only when the developer was
about to commence building
could the bank get involved —
and then only to make
construction loans.
50. Reddy pushed interest rates up to more than
20 percent, which of course dampened the
housing frenzy.
He made banks put aside extra capital for
every loan they made.
In effect, Mr. Reddy was creating liquidity
even before there was a global liquidity crisis.
51.
52. India's trade theory is changing a lot as it is
turning out to be more of a manufacturing
export oriented country.
The net trade of services done by India
accounts to about just 22% .
The trade practices of India with US has
decreased .
BUT on the other hand has relatively
increased with China reflecting out that the
risk of US recession has been deflected.
53.
54. However on a short term it will have its effect
on the IT companies and also on its revenues
in their future quarter results.
The growth in the employment in the IT
sector in the year 2008 was 44 % up till
August 08 which will drop to about 28% net
growth for this financial year.
55. For both commercial and residential real-
estate, the proportion of black to white
money may vary from 20 to 40 % depending
on various factors.
However, the borrowing from banks is based
only on the white portion as it should be.
Thus the value of the asset is substantially
higher than what is shown in the book due to
financing of the asset partly by black income.
56. The presence of black
money or what one
may call the hidden
net worth of India has
tremendous
advantages in times of
asset based lending
and borrowing since
only a part of the price
of asset is seen, like
the tip of the iceberg.
The other portion of
the asset finance by
the borrower from
black fund makes it
imperative for him to
protect his position by
meeting the
57. The amounts in the form of black money are
large and mostly invested in real-estate and
gold, two major areas of passion for the
Indian middle-class. As long as a good
portion of our economy and asset financing is
by black income we need not worry about
sub-prime
Editor's Notes
Asian Countries were also sending surplus funds into the US economy to help revive it
JP Morgon Chase, Citigroup, Deutsche bank, Goldman Sachs, Lehman brothers, Bank of America, Merill Lynch, RBS
Aggressively sold MBS, thus off loading such loans from their Balance Sheet
MBS sold to banks, instituttions, hedge fund, investment banks, govts: japan, europe, russia (mainly)
CDO-collateralized debt obligation
MBS: mortgage backed security
Non-traditional mortgages (such as 2/28 (section) and interest-only mortgages) that offered low introductory rates and minimal initial costs such as "no down payment”
Some argue that the rating agencies should have foreseen the high default rates for subprime borrowers, and they should have given these CDOs much lower ratings than the 'AAA' rating given to the higher quality tranches. If the ratings had been more accurate, fewer investors would have bought into these securities, and the losses may not have been as bad.
Downward spiral: banks foreclose at distress sale (low prices) therefore, property prices drop,
The increased use of the secondary mortgage market by lenders added to the number of subprime loans lenders could originate. Instead of holding the originated mortgages on their books, lenders were able to simply sell off the mortgages in the secondary market and collect the originating fees. This freed up more capital for even more lending, which increased liquidity even more. The snowball began to build momentum.
A lot of the demand for these mortgages came from the creation of assets that pooled mortgages together into a security, such as a collateralized debt obligation (CDO). In this process, investment banks would buy the mortgages from lenders and securitize these mortgages into bonds, which were sold to investors through CDOs.
Max : bought by japan,europe, russia
They are out of regulatory control. Supposed to sell to knowledgeable investors, thus less paper work, less disclosures. Not their money.
MBS, COD Promoted because they were issued at small premium over Gsec and assured high returns if and when the loans got serviced (refinanced by the borrower)
. Prime Minister Dr. Manmohan Si
ngh assured parliamentarians and the
nation that “there is no place for fear. Th
is is the time for unity of purpose and
resolute action.” While the Indian ec
onomy became more resilient, domestic
demand continued to be its
key growth driver and the
Indian financial market
has been more circumspect than the we
stern regulators, the spillage of the
sub-prime domino has significant negativ
e impact on the Indian economy in
the current context of a rapidly falling
Sensex, a depreciating rupee, faltering
growth momentum, domestic credit string
ency and a slowdown of exports of
both goods and services. The recession
ary shock has begun to hit Indian
exports and slowing down of the Indian
economy has affected various sectors.
Sectors, such as, textile, real estate, in
frastructure, civil aviation, automobile,
housing and few export dependent sect
ors like information technology are
likely to be impacted.
With the US and several European countries slipping under the full blown recession, Indian exports have run into difficult times, since October. Manufacturing sectors like leather, textile, gems and jewellery have been hit hard because of the slump in the demand in the US and Europe. Further India enjoys trade surplus with USA and about 15 per cent of its total export in 2006-07 was directed toward USA. Indian exports fell by 9.9 per cent in November 2008, when the impact of declining consumer demand in the US and other major global market, with negative growth for the second month, running and widening monthly trade deficit over $10 billions.
Official statistics released on the first day of the New Year, showed that exports had dropped to $1.5 billion in November this fiscal year, (Sivaraman, 2008) from $12.7 billion a year ago, while imports grew by $6.1billion to $21.5 billion.
The global financial crisis has had a deep impact on Indian stock market: within one year
(2008), there occurred a more than 50 percent fall in the SENSEX of Bombay stock exchange,
the Bombay stock exchange benchmark
index, which touched a high of 21,206 in January 2008,
fell down to less than 10,000 during December 2008, shows the clear picture of the down fall off
the stock market in India
Since September 2008, Indian corporates managed to raise only US$18 billion in FY2008–2009 as commercial credit from the overseas market, which is 41% less than the amount raised in the previous year. The fall was rather phenomenal during the second half of FY2008–2009 when ECB approvals declined from US$3 billion in September 2008 to less than US$0.5 billion in February 2009.
For the first time in last six years, FDI inflows witnessed a negative growth of 2% in FY2008–2009.
The sluggishness of the inflows of FDI, ECBs, and remittances combined with the massive outflow of FII has resulted in the significant deterioration of India's capital account in FY2008–2009. From its peak in September 2007, the capital account surplus as percent of GDP started to decline and disappeared completely by December 2008.
This is the first time after a long period that the capital account component of India's BOP had been negative.
On October 10 the forex reserve of India had fallen from $316 billion dollar to $274 billion dollar. RBI has sold about $42 billion to give strength to the rupee. Some more measures should be needed to tackle the situation. - See more at: http://www.merinews.com/article/the-depreciating-rupee-and-indian-economy/146506.shtml#sthash.bIDEDefK.dpuf