HIST 17C Lecture Notes - Lecture 10: Emergency Economic Stabilization Act Of 2008, Dot-Com Bubble, Real Estate Bubble
Crash in 1929 and economic meltdown of 2008 were preceded by a period of:
➔Lax or little regulation
➔Cheap credit
➔Problems in housing and automobile industries
➔Inflation
➔Runaway speculation on stock market
➔Growing gap between salaries of executives and workers
2008 meltdown
Roots
➔Glass-Steagall legislation of 1933 (separated regular banks and investment banks) was
repealed in 1999
➔Following the dotcom bubble burst in 2000 and 9/11, the Fed dropped interest rates
because of feared stock market meltdown
â—†Dotcom bubble: historic economic bubble and period of excessive speculation in
tech companies
â—Ź Period of extreme growth in the usage and adaptation of the Internet
➔Cheap financial/low interest rates helped cause housing bubble
â—†Housing bubble: run-up in housing prices by demand, speculation and the belief
that recent history is an infallible forecast of the future
â—Ź Start with an increase in demand in the face of limited supply which takes
a relatively long period of time to replenish and increase
â—‹ Speculators enter the market believing that that profits can be
made through short-term buying and selling → drives demand
â—‹ At some point, demand decreases resulting in a sharp drop in
prices (bubble bursts)
â—†As housing prices fell, borrowers could not pay off their mortgages
â—Ź Banks and hedge funds that had invested big in subprime mortgages
were left with worthless assets as foreclosures rose
➔Global meltdown could have been avoided by Wall Street bailout, but all confidence in
Wall Street and global markets disappeared
2008 election
Hillary Clinton’s strategy
➔Adopted a populist message and connecte with white working-class voters
➔Contended that Obama lacked the experience to be commander in chief
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Crash in 1929 and economic meltdown of 2008 were preceded by a period of: Growing gap between salaries of executives and workers. Glass-steagall legislation of 1933 (separated regular banks and investment banks) was repealed in 1999. Following the dotcom bubble burst in 2000 and 9/11, the fed dropped interest rates because of feared stock market meltdown. Dotcom bubble: historic economic bubble and period of excessive speculation in tech companies. Period of extreme growth in the usage and adaptation of the internet. Cheap financial/low interest rates helped cause housing bubble. Housing bubble: run-up in housing prices by demand, speculation and the belief that recent history is an infallible forecast of the future. Start with an increase in demand in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market believing that that profits can be made through short-term buying and selling drives demand.
