POLS 2080 Lecture Notes - Lecture 9: Tulip Mania, Heavily Indebted Poor Countries, Debt Relief
27 Nov 2015
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Lecture 9 (oct 8, 2015) cover expenses or pay for investments- this idea is very old. Lending, borrowing and debt- the idea of borrowing money to. The entire banking system across the world depends on this idea. Code of hammurabi (c. 1754 bce)- first known written code of. Problem: prices trades for assets (tulip bulbs) ended up law dealing with lending and debt amount keeps growing. Banks like lending money- because in the end it"s how they make profit. Tulip mania, 1634 first recorded speculative bubble to burst- triggering an economic crash. Bubble= when an objects prices rise and rise according to popularity. Until no one can afford to buy them- prices then drop and the ones who raised them in the first place end up loosing big amounts of money deviating significantly from the intrinsic value of the asset. This is similar to the mortgage crisis of 2008 in us that resulted in a global recession.
