5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on...
-
Upload
anis-woods -
Category
Documents
-
view
218 -
download
0
Transcript of 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on...
![Page 1: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/1.jpg)
5 October 2015by
Sigrid Brevik Wangsness
![Page 2: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/2.jpg)
The largest economy in the world with a major impact on the global economy
Until October 2008 an economic superpower – did the financial crisis change that?
A significant characteristic of the US economy is its resilience, i.e. its ability to bounce back after slowdowns. Has this happened again?
![Page 3: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/3.jpg)
Collapse of the housing market
The property bubble burst: House prices dropped dramatically
Sub-prime loans = risky loans (mortgage loans for borrowers with a poor credit history)
![Page 4: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/4.jpg)
The banking crisis
Banks had granted too many risky loans Bad debts – huge losses
Complicated financial instruments: MBSs (mortgage-backed securities) CDOs (collateralized debt obligations)
“Credit crunch”
![Page 5: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/5.jpg)
Vocabulary
To default Treasury billsLeverage InterestHomeowners BrokerMortgage lender AAA ratingInvestment banker Prices plummetCredit Default Swap Foreclose
![Page 6: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/6.jpg)
Speculation and excessive risks on the stock markets Lack of trust Free fall of share prices
Insufficient regulatory system Deregulation encouraged “gambling” Repeal of Glass-Steagall Act (1999)
![Page 7: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/7.jpg)
The Federal Reserve System (the Fed) (= the US central bank)
Too low interest for too long? Too easy to borrow from the Fed?
Did it therefore indirectly encourage speculation?
![Page 8: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/8.jpg)
US government intervention in the economy
Rescue (bail-out) packages
The role of the Federal Reserve System
"Head of the Fed” at the time: Ben Bernanke
“Quantitative easing”
![Page 9: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/9.jpg)
Part –nationalization of American banks
Cooperation between major economies:Summits (G20), co-ordinated efforts
The IMF
![Page 10: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/10.jpg)
National Deficit/ Debt
USD 18.5 trillion. How serious is that?
Trade Deficit
Current-account balance: -$429bn (Q2) -2.6% of GDP in 2015 (forecast)
Budget Deficit Budget balance: -2.6% of GDP in 2015 (forecast)
![Page 11: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/11.jpg)
GDP: +2.7% growth in Q2, 2015 Forecast for 2015: +2.4%
Inflation: +0.2% (Aug. 2015)
Forecast for 2015: +0.4%
Unemployment: 5.1% (Aug. 2015)
![Page 12: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/12.jpg)
(See article in the Comp.)
The Primary Sector
The Secondary Sector
The Tertiary Sector
![Page 13: 5 October 2015 by Sigrid Brevik Wangsness. The largest economy in the world with a major impact on the global economy Until October 2008 an economic.](https://reader036.fdocuments.us/reader036/viewer/2022062313/56649f455503460f94c6680f/html5/thumbnails/13.jpg)
The FedoHead of the Fed”: Janet YellenoOrganizationoAppointmentoKey powers: Monetary Policy
Banking Regulations
Wall StreetoNYSE, AMEX, NASDAQoBanks, insurance companies, rating agencies, brokers, asset managers etc.