POL_S 103 Lecture Notes - Lecture 10: Real Estate Bubble, Bear Stearns, Moral Hazard
Document Summary
Given with the intention of promoting economic welfare and. Altruistic motives: genuine desire to alleviate poverty, other problems. Scandinavian countries very altruistic, us very strategic, others somewhere between. Challenges: corruption, conflict often diverts aid from intended purpose, disincentives good policy, entrepreneurship, creates cycle of dependence, if given for strategic reasons, doesn"t necessarily go to areas of greatest need. Originally helped finance reconstruction of europe following wwii. Encourages private sector investment in developing world. Provided billion in aid in 2013. Member states contribute budget, vote shares based on donations. Price bubbles occur when the true value of something isn"t known: pre-2008: unclear exactly how much demand for housing there was in us. As upper and middle classes settled into homes, lenders began providing mortgages to less wealthy clients sub-prime mortgages . Since house serves as collateral mortgages generally very safe investment.
