0
2008 Economic Crisis
A sub-category dedicated to the economic crisis that has affected us all
810 Questions
How much costly a PIA ticket is from Karachi to Jeddah?
6 year child Karachi to jaddeh ticket rate 2010
What is a company orientation?
A company orientation is a series of classes given to new hires to familiarize themselves with their new company. The more complex a company is, or the more complex your duties within the company are, the more in-depth your orientation will be.
What effect did protective tariffs have on the American economy?
They made American goods cheaper than imported goods
When we can not measure in terms of money but we can measure of level of satisfaction then it is called cardinal approach. The cardinal theory recognizes that each consumer works off of a limitation on resources, specifically a limitation on money. This resource limitation requires consumers to make utility choices with a strong consideration for price. The result is a theory that suggests that a higher quality item, or item with greater utility, will be favored by a consumer if the higher price is justified by his limitation and his faith in the increase of quality.
What advantages might a multinational bring to a host nation?
- Improve the economy
- Invest in the economy and infrastructure
- Provide jobs
- Improve trade
- Bring expertise
However, it is important to remember that left-wing theorists of IR contend all of these points. MNCs actually act as a drain on third-world nations, keeping them in perpetual poverty.
What is the brain behind every business?
The brain behind every business is that the manager or share holders are on the profit making their aim is to make profit
How do you do a production possibility curve graph?
I think this site in the Related Link below will help.
Who predicted the Lehman brothers collapse?
The collapse of Lehman Brothers in 2008 was notably predicted by a few financial analysts and economists, including Nouriel Roubini, who warned about the impending financial crisis due to the housing bubble and excessive risk-taking in the financial sector. Additionally, the investment bank itself faced warnings from its own analysts and some external observers, but these predictions were largely ignored by the broader market until it was too late. Ultimately, the failure of Lehman Brothers became a significant event that highlighted the vulnerabilities within the global financial system.
A kind of context clue that the mening of the unknown or unusual world is restated in the context or sentence.
You want to know wether lagos state polytechnic part time form is available now?
yes it is available via interswitch.
Presumably it means question 3 which has not been given therefore it follows that to answer it is impossible.
A deficit is a shortage. Similar to anaccount that is overdrawn. in other words you are spending money that does in reality not exist yet.
Deficit spending is spending money you don't own in other words borrowed money.
A deficit, or deficit financing, is what happens when the government spends more money than it takes in from taxes. Deficit spending can be accomplished by borrowing or simply by printing more money. Deficit is a lack or shortage...
When governments say that there is a deficit, they mean that they are unable to come up with the required amount of money needed to run the country.
The Subprime Mortgage Crisis is an ongoing economic problem that has become more apparent in 2008 and has resulted in reduced liquidity in the global credit market and also the banking & financial systems. This crisis has exposed the weakness in the global financial system and also the regulatory framework that is overlooking them.
Some of the reasons for this crisis are:
1. The US Real estate market crash
2. High default rates on Subprime loans &
3. Subprime Mortgage backed securities
A Subprime loan is a loan that is granted to a borrower who does not qualify for loans owing to a variety of risk factors like low income level, bad credit history etc.
How it all started:
In the past few years, due to high liquidity and low interest rates on mortgage loans, the demand for housing properties started increasing. After the advent of the subprime lending practices, people who were, not so creditworthy began to buy homes using these loans. This resulted in a heavy demand for houses which in turn fuelled the increase in residential property prices. The prices increased exponentially and people who already owned homes, opted for refinance at lower interest rates.
At the same time, Banks were lending mortgage loans to everyone who asked for it, considering the property price hike. On one hand, they would get their money back even if the borrower doesn't repay the loans and on the other hand the banks were selling their loan products to investment companies who packaged them into MBS and sold them in the open market. This resulted in the bank getting back almost their entire loan amount which they started lending to further subprime customers.
What went wrong?
Trying to cash in on the heavy demand for residential properties, real estate majors started promoting a huge number of residential projects. This led to overbuilding. This resulted in a surplus inventory of homes which eventually caused the real estate prices to decline by the end of 2006.
Ease of availability of loans coupled with the assumption that property prices would continue to move upwards prompted a lot of subprime borrowers to buy houses. Once the housing prices started to fall, the interest rates on loans started to rise. Most of the borrowers were unable to make their payments on time and also due to unavailability of refinance options default on loans started to increase. For most home owners, their outstanding amount on the mortgage loan was much more than the value of their houses. This motivated home owners to walk away from their property in spite of the fact that it would impact their credit ratings. People were not ready to pay hefty mortgage amounts when their property wasn't worth that much. If our home loan was worth 10 lacs and our home was worth only 6 lacs would we continue to pay our EMI on the home loan? :-)
This resulted in a surplus supply of houses which were available for Sale. The only way banks could reclaim their amount was by selling these homes. With the availability of so many homes, the prices of residential property fell further. The losses & Non Performing Asset's for banks started to increase.
The high rate of default on subprime loans & downward movement of housing prices resulted in lower demands for the MBS products created out of subprime loans. The banks & financial institutions were unable to generate the liquidity that they were expecting to which resulted in an overall credit crunch. The Banks were left with too many houses with too little buyers and similary the financial institutions had lots of MBS products with very little takers.
