Credit Crisis: Is There an End in Sight?
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The document summarizes the global credit crisis that began in 2007 and its widespread impacts. It started as a downturn in the US housing market and spread to global financial markets as large banks reported massive losses from mortgage-backed securities. The crisis led to a deep global recession, widespread job losses, and government bailouts of banks. While some regions and countries were affected more indirectly, the crisis underscored the interconnectedness of the global economy and demonstrated that no country was immune to the turmoil that began in the US housing and credit markets.
Credit Crisis: Is There an End in Sight?
- 1. Credit Crisis: Is There An End In Sight?
- 2. What actually happened? Fed rate drops to 1% Rising home prices Finance industry investing heavily in real estate Spend like there is no tomorrow! Rising U.S. debts! Rest of World increase IOUs Subprime borrowers default! U.S. housing market bursts 1 st wave of mortgage related losses Crisis in large global banks Wall St. down, bankruptcies, credit writedowns of over $500 bn Turmoil in world markets!
- 3. Whats the impact of this? Escalating credit loss: $1.4 - 2 trillion Credit writedowns of over $500 billion Heavy job losses from the financial crisis Capital raising of over $350 billion There is more to happen..Governments nationalizing banks guaranteeing bank deposits raising emergency funds slashing interest rates planning bailouts
- 4. Who has been affected? You thought only homeowners, bankers and brokers? No. Even billionaires, Even small businesses, Even consumers There is no free credit anymore!
- 5. Credit Crisis: The Americas Canada : reduced interest rates and increasing liquidity Mexico : falling Peso and dwindling economy Brazil : э Heavy credits, but stabilizing and recouping U.S. : ??? still working out financial bail-outs; more bank failures to come Argentina : Heavy job losses, higher import tariffs and weaker Peso Borrow indefinitely: Only in America
- 6. 油
- 7. Some are most affected. Europe - European banks have lost more money than American banks due to investments in the U.S. mortgage market.油 Government stepping in to bail out banks from going under in Denmark and U.K. Threat of recession in Irish Republic and Spain France, Germany, Italy and Portugal follow suit Iceland is all but officially bankrupt
- 8. Some are indirectly affected
- 9. Some are unaffected.. Australia, Malaysia, New Zealand, Singapore, South Korea and the Middle East have protected foreign currency deposits. Hence a promising economy
- 10. BUT, the crisis is truly GLOBAL! Ireland : First Eurozone co u ntry to slide into recession Poland : э Part of Eurozone,but has a stable banking sector Russia : Fast growing economy with large foreign reserves Singapore : Prosperous, government guarantee for deposits till 2010 China : ??? Strained with economic surplus and counterfeit goods India : Economic slowdown with high inflation and poverty France : Sluggish economy heading for recession Hungary : -ve credit raing, heavy debts, huge current account deficit
- 11. Is there an end in sight? It is too early to tell. But, there is already a RED ALERT! Oil trading at $95.71 a barrel! The global economy will weaken further..
- 12. The end of American economic dominance and the birth of a new world order.. So, who will be the next superpower? Clue: Asian money is actually bailing out the western banks!