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Lecture

2J03 - February, 16, 2012.docx

3 Pages
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Department
Political Science
Course Code
POLSCI 2J03
Professor
O' Briem

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Description
Global Political Economy 2J03 Thursday February 16 2012I Credit Crises In order to understand credit crises must understand HOUSING BUBBLE2001 technology bubble bursto Lots of investments in technologyOver 2 years interest rates lowered from 65 to 1This meant more people bought housesBecause of this house prices rose 2x 200006People borrowed on the value of their houses Mortgage Security DerivativesNew financial innovations are being developedHigh risksubprimepoor credit no down paymentNINJANo Income No Job or Asset o Didnt have to show evidence of any of these things so anyone could get a mortgage Mortgages bundled sliced and sold offThis spread risk through whole system o Investments banks everyone took these securities exposing everyone to riskLenders no longer took riskinvestors did
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