the credit cruncher
DESCRIPTION
The Credit Crisis Crunched in 30!TRANSCRIPT
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The Credit Cruncher
A presentation by
Michael Eury
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“The economy will never stop growing.........”
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Anyone can buy a house
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Subprime mortgages =
greater risk of defaulta history of bad loans or defaults,
those with a recorded bankruptcy,
or limited debt experience
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Sub-prime mortgageSub-prime
mortgage
Sub-prime mortgage
Sub-prime mortgage
Sub-prime mortgage
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Bankers named these “Collateralised Debt
Obligations!”
Note: Earlier name, “Worthless Junk”, was less popular with investors
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A A A
rigorous analysis by ratings agencies
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US investment banks are
prime movers in these
transactions
(‘possibly’ not a real banker)
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Banks, governments,
businesses around the world bought these ‘rock solid’
assets
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And on it went.......
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Debts assets
Debt assets
Debt
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Until one day, when........
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Honeymoon periods on sub-prime interest rates ended
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Mortgage holders couldn’t pay the
higher interest rate
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...instead of house $ outweighing the mortgage....
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...mortgage $ are greater than a house’s worth!
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for the unknowing buyers of the Junk assets....
values and financial returns.....
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are washed away
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up to 100 US mortgage lenders close down and....
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CDO’s (Junk assets) !!
Value
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Established investment banks become insolvent with a
great risk of more to come!
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Commercial confidence plummets
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US Federal reserve launches $700b
‘rescue’ package
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Stockmarkets crash
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no longer confined to the US
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it’s now more like this!
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Economists don’t quite know what to
do
(and politicians)
“I’ll count to 10, then everything will be all
right!”
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“Whoops, forgot to cross my fingers! I’ll try again. 1, 2, 3.......”
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