POLSCI 2J03 Lecture Notes - Lecture 13: Subprime Lending, Financial Regulation, Europe 1
19 Mar 2020
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Document Summary
Overview of financial issues: 2008 debt crisis, euro debt crisis, position of the us dollar as the key financial currency, problem of tax evasion on an international scale. Important because this crisis has a legacy of financial chaos and slow growth cross industrialized countries. Some people trace rise of populist regimes back to the crisis in us and europe: loans given to people who could not service them, facilitated by minimal financial regulation. 2000, bubble in tech industry, people were impressed by information technology. Lots of money going into high tech firms. Response in the us was to reduce interest rates, lowered them from 6% in the early 2000s to 1% which made it cheaper to borrow. Consequence of lowering interest rates-- huge amounts of money flowing into the housing market. People borrowed against the value of their home. Subprime market, high risk, no down payment. Subprime lending for people with bad credit.
