Mark Alexander A. Salvador

SPENTREP F10

Financial Meltdown in USA

The StoryMajor Events of the Decade

Dot-com Bubble9/11 AttacksAfghan and Iraq Wars

Effects on the MarketsSlashed Interest Rates

The China FactorJoined the WTOMassive shift of global manufacturing to the

nationLow-cost Chinese goods flooded markets

The StoryGlobal Demand for Oil BoostedUS Trade DeficitInvestment Outlet was the USA

Investors looked for safe-haven investments such as US Treasuries

Subprime MortgageA type of mortgage that is normally given to borrowers

with low credit ratings. Since the borrower has a lower rating, a conventional

mortgage is not offered because the lender views the borrower as having a larger than average risk of defaulting.

Lenders often charge higher interest rates on subprime mortgages in order to compensate for carrying more risk.

The StoryWall Street Produces Complex SecuritiesIndividual Loans could be Securitized Lenders could Originate Loans, Resell and Use

the Proceeds to Make More LoansHome Buying Spree

Low Borrowing CostsEasy Access to Credit

Making Significant Returns through Buying and Selling

The StoryBenefits

Produced JobsHouse Becomes Largest AssetLiquid

Signs of the Bubble BurstDeclining House PricesHigh Interest RatesMortgages Could Not be PaidDefaultsMarkets of Mortgage-Backed Securities Shut

Down

Effects of the FiascoMoney Stopped FlowingBanks Began Reporting Losses on their Mortgage-

backed HoldingsBanks Shrank from Doing Business with Each OtherInsolvencies and Bailouts

Bear StearnsFannie Mae & Freddy MacLehman BrothersAIG

EffectsUnemploymentGovernment Deficits

Effects of the FiascoEffects (continued)

High PricesCost on WelfareDepreciation of Currencies

Philippines and the Rest of AsiaEmerging Economies Performed BetterBenefits of a Conservative Banking SystemHigh Population Fuelled ConsumptionCurrency AppreciatedUSD Lost Some Purchasing PowerLocal Goods and Services Became Expensive

In Relation to EntrepreneurshipThe need to be updatedGreed is cancer

THE END

Thank You!

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“Ireland, Greece, Spain, Portugal: a Same European ‘Peripheral’ Problem?” Ireland after Nama. 26 February 2011 <http://irelandafternama.wordpress.com/2010/11/24/ireland-greece-spain-portugal-a-same-european-%E2%80%98peripheral%E2%80%99-problem/>.

Bibliography“ The Lesson of Dubai: The Crisis is not Over.”

Time. 26 February 2011 <http://www.time.com/time/business/article/0,8599,1943392,00.html>

“Q&A: Greece’s Financial Crisis Explained.” CNN. 26 February 2011 <http://edition.cnn.com/2010/BUSINESS/02/10/greek.debt.qanda/index.html>

“The Fuel that Fed the Subprime Meltdown.” Investopedia. 23 February 2011 <http://www.investopedia.com/articles/07/subprime-overview.asp>

Bibliography“US Subprime Market.” Economy Watch. 26

February 2011 <http://www.economywatch.com/us-subprime/>

“What Caused the Subprime Mortgage Crisis.” About.com. 24 February 2011 <http://useconomy.about.com/od/criticalssues/tp/Subprime-Mortgage-Crisis-Cause.htm>