The big short
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Lewis S. Rainier was considered the "father" of mortgage-backed securities. The movie The Big Short depicts how some investors bet against the banks that the housing market would crash. The banks were doing risky proprietary trading to earn big bonuses, without reserves in case of losses. This led to the financial crisis and many people losing their homes, while the bankers received big bonuses. The Financial CHOICE Act revoked rules meant to prevent risky bank betting and proprietary trading.
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The big short
Christian Bale plays eccentric investor Michael Burry who anticipates the 2007 collapse of the US housing market. He envisions creating a credit default swap market to bet against mortgage-backed securities. Burry's $1 billion bet involves paying monthly premiums to banks. As the housing market declines and his fund's value increases 489% to over $2.69 billion in profits, the film illustrates how some profited from the crisis by shorting the market.
The big short
Michael Burry discovers that the US housing market is on the verge of collapse in the early 2000s due to risky subprime mortgages being bundled into bonds. He buys credit default swaps to bet that the mortgage-backed securities will fail. Others like Greg Lippmann, Steve Eisman of FrontPoint Partners, and Charles Ledley and Jamie Mai of Cornwall Capital also buy swaps. In 2007, the housing bubble bursts as subprime mortgages default, causing major financial firms to collapse until the US government intervenes with a bailout.
Global financial crisis 2008
1. The 2008 financial crisis was caused by the bursting of the housing bubble in the U.S., also known as the subprime mortgage crisis.
2. Subprime lending involves giving loans to borrowers who may have difficulty maintaining repayments, and are characterized by higher interest rates and poorer terms.
3. The crisis occurred due to a relaxation in lending regulations, poor creditworthiness of borrowers, rising housing prices, and borrowers' inability to pay their mortgages, leading to failures of major banks and financial institutions.
Global Financial Crisis (2007 - 2009)
[SERIES 4/4] The Global Financial Crisis (2007 - 2009)
from the Frederic Mishkin's The Economics of Money, Banking, and Financial Markets
Financial Crises on Advanced Economies Chapter
Outline:
SERIES 1: Factors Causing Financial Crises
SERIES 2: Dynamics of Financial Crises in Advanced Economies
Series 3: The Great Depression
SERIES 4: The Global Financial Crisis of 2007 - 2009 (The Great Recession)
Other Sources:
The Causes and Effects of the 2008 Financial Crisis
https://www.youtube.com/watch?v=N9YLta5Tr2A
The Subprime Crisis
The document discusses the subprime mortgage crisis that occurred in the United States. It begins by defining prime and subprime loans, with subprime loans going to borrowers with poorer credit histories and higher interest rates. A housing bubble formed as subprime mortgages increased and home prices rose, but this bubble eventually burst in 2005-2006. As home prices dropped and borrowers defaulted on subprime loans, large losses were incurred by financial institutions, investment banks, and foreign investors. The US government responded with a $800 billion bailout package and other legislation to provide relief and regulate derivatives that had worsened the crisis.
The global financial crisis 2008
The Global Financial Crisis was caused by expanded lending to subprime borrowers in the US housing market who struggled to repay their loans, spreading losses to financial institutions globally through interconnected credit markets. The crisis impacted developing countries through lower exports due to reduced demand from industrial nations and less foreign investment as risk appetite declined. Central banks addressed the crisis through liquidity injections and government rescue plans, while major banks consolidated to avoid bankruptcy.
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The document summarizes the subprime mortgage crisis and its global impacts. It began with loose lending practices in the US that led to a housing bubble. When housing prices declined and borrowers defaulted, it sparked a financial crisis as risky loans were bundled into securities that spread the risks throughout the global financial system. Major banks and financial institutions collapsed. Credit tightened globally and stock markets plunged significantly. The crisis also impacted economies worldwide through tightening credit, falling markets, and reduced trade and business activity. While government interventions helped stabilize markets, full recovery will take time as the financial systems remain fragile.
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The big short
Christian Bale plays eccentric investor Michael Burry who anticipates the 2007 collapse of the US housing market. He envisions creating a credit default swap market to bet against mortgage-backed securities. Burry's $1 billion bet involves paying monthly premiums to banks. As the housing market declines and his fund's value increases 489% to over $2.69 billion in profits, the film illustrates how some profited from the crisis by shorting the market.
The big short
Michael Burry discovers that the US housing market is on the verge of collapse in the early 2000s due to risky subprime mortgages being bundled into bonds. He buys credit default swaps to bet that the mortgage-backed securities will fail. Others like Greg Lippmann, Steve Eisman of FrontPoint Partners, and Charles Ledley and Jamie Mai of Cornwall Capital also buy swaps. In 2007, the housing bubble bursts as subprime mortgages default, causing major financial firms to collapse until the US government intervenes with a bailout.
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1. The 2008 financial crisis was caused by the bursting of the housing bubble in the U.S., also known as the subprime mortgage crisis.
2. Subprime lending involves giving loans to borrowers who may have difficulty maintaining repayments, and are characterized by higher interest rates and poorer terms.
3. The crisis occurred due to a relaxation in lending regulations, poor creditworthiness of borrowers, rising housing prices, and borrowers' inability to pay their mortgages, leading to failures of major banks and financial institutions.
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[SERIES 4/4] The Global Financial Crisis (2007 - 2009)
from the Frederic Mishkin's The Economics of Money, Banking, and Financial Markets
Financial Crises on Advanced Economies Chapter
Outline:
SERIES 1: Factors Causing Financial Crises
SERIES 2: Dynamics of Financial Crises in Advanced Economies
Series 3: The Great Depression
SERIES 4: The Global Financial Crisis of 2007 - 2009 (The Great Recession)
Other Sources:
The Causes and Effects of the 2008 Financial Crisis
https://www.youtube.com/watch?v=N9YLta5Tr2A
The Subprime Crisis
The document discusses the subprime mortgage crisis that occurred in the United States. It begins by defining prime and subprime loans, with subprime loans going to borrowers with poorer credit histories and higher interest rates. A housing bubble formed as subprime mortgages increased and home prices rose, but this bubble eventually burst in 2005-2006. As home prices dropped and borrowers defaulted on subprime loans, large losses were incurred by financial institutions, investment banks, and foreign investors. The US government responded with a $800 billion bailout package and other legislation to provide relief and regulate derivatives that had worsened the crisis.
The global financial crisis 2008
The Global Financial Crisis was caused by expanded lending to subprime borrowers in the US housing market who struggled to repay their loans, spreading losses to financial institutions globally through interconnected credit markets. The crisis impacted developing countries through lower exports due to reduced demand from industrial nations and less foreign investment as risk appetite declined. Central banks addressed the crisis through liquidity injections and government rescue plans, while major banks consolidated to avoid bankruptcy.
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World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4study presented by a Big 4
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The big short
- 1. It ain't what you don’t know that get you into trouble . Its what you know for sure that just ain’t so – Mark Twain Based on a true story
- 2. CONTENT Introduction Summary What do we learn from the movie ? Roles of banks in INDIA Plot Key learning's
- 3. INTRODUCTION wis S. Rainier er Lewis Ranieir
- 4. Definition Short in finance means selling something at a higher price and buying it again at a lower price in Future. Summary ► Lewis S. Rainier was considered the "father" of mortgage-backed securities . ► The four antiheroes of The Big Short had bet with the banks that housing market would crash. ► The banks were doing proprietary trading ,hoping to make big bonuses. ► Banks did not have any money allocated in reserve if they failed . ► It would be like a person going into a casino and betting $1billion at a blackjack table. ► “Credit Default swap ” ► What happened to the bankers who did that , they got big bonuses . What happened to the home owners? They lost their homes !! ► The hedge fund creditors ( a group of wealthy investors) could seize all of the bank assets including all customer deposit money in every major bank all over the country.
- 5. Financial CHOICE Act ► Financial CHOICE Act is a bill introduced to the 115th United States Congress ► After the financial crisis , as a part The Dodd–Frank passed by President Barack Obama on July 21, 2010.) ► There were a set of rules introduced to stop banks betting for their own profit , called the VOLCKER RULES after the man who designed them. ► Trump passed the Financial CHOICE Act June 8th ,2017 is revoking the VOLCKER RULES designed to stop this bank betting hastening the next bank crisis.
- 6. What do we learn from the movie? Greed is never a good strategy Large risk reward ratio Consult a professional before making financial decision Trust your intuition and be confident enough Have a clear vision Be a good presenter
- 7. Role of banks in INDIAGrandfather RBI Father Commercial banks son General public banks
- 8. Plot
- 9. Key Learning's Look under every circumstances Be careful where you invest your time Drive the extra mile