MORTGAGES:

DEFAULT: can’t payoff mortgages

FORCLOSURE: after defaulting, bank seizes your property

MORTGAGE BACKED SECURITIES:

home loans bundled together.•Values are unknown

•Securities wont work if you stop paying mortgages

Loans from the bank to purchase property

• You end up without a house• Bank ends up with a house– Banks are not in the real-estate business

REPOSS ---

S ESSEDPROPERTY OF THE BANK

________________________________________________N O T I C E

THIS PROPERTY HAS BEEN FORECLOSED BY THE BANK.

HOMEOWNER’S FAILURE TO PAY OFF MORTGAGES.

THIS PROPERTY AND ANY ASSETS ARE NOW OWNED

BY THE BANK.

Rescue/Bailout Plan

• Treasury Dept. and Secretary Paulson have $700 billion at disposal

• Will purchase bad mortgage securities from banks

• Banks ability to give out loans is based on how much money they have

• Bill is constantly updated and modified

Government & Banks

• Expanded role with Banks

• Purchased $250 Billion

• Government has partial ownership

• Temporary/Short Term

GLOBAL ECONOMY● Affecting the entire world● Related stock markets● Recession

EIGHT COUNTRIES● Mostly European● Working with the U.S.

COORDINATE THE ECONOMIC POLICY● Global coordination

DO WE NEED A NEW GLOBAL ECONOMIC

STRUCTURE?G8G8