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Lecture 07 Notes

Political Science
Course Code
Norla Carloff

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Disequilibrium in Financial Markets and the
International Monetary System
Financial Crisis
Lecture 07
General Causes of the 2007 Financial Crisis:
Some agreement of the factors that led to the crisis
The cause was a mix of a credit boom and a housing downtur n
Caused widespread failure of financial insitutions and freezing of capital markets
Mechanism that connects capital markets + housing market =
Tech market is very similar; though did not generate a systemic financial crisis
A necessary condition for financial crisis was that large financial institutions did not
transfer t he credit risk to other investors
What are derivatives?
oThey are assets backed by securit ies
oMor tgage backed securities but can be different things
Omfg this course is so bor ing wtffff ff f f f f
Liquiditiy enhancement facility de banks did de stuff but made de bod choices. Now
dey be sufferin n shit.
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