Explore BrainMass

International Financial Crisis

The financial crisis of 2008 is said to be the worst financial crisis since the Great Depression of the 30s. It has made a lasting impact on the finance and banking world¹. The main causes of the 2007/8 financial crisis was the financial debt and mortgage-backed assets¹. During the late 1990s and early 2000s, mortgage-backed securities (MBSs) were frequently being issued for the purpose of securitization. Investment banks were purchasing mortgages, repackaging them, and selling the debt to investors. This resulted in the decrease of available mortgages to securitize, so product groups at banks began to take the unsellable trances of mortgage-backed securities, repackage them, and sell them as collateralized debt obligations¹.

The US and global banks then proceeded to spend and borrow large sums of money at low rates to fund investments. Many of the top investment banks were completely funded by short term borrowing. Billions of dollars worth of mortgages were given to people with low credit rating on adjustable rates. When house prices stopped rising and began to fall, people could no longer refinance and remortgage their homes for cash and started to default¹.

The default rates on mortgages spiked and the collateralized debt obligations and mortgage-backed assets were falling, making investors lose confidence in the top trances and banks, which hold large amounts of assets. In June 2007, one of the largest investment banks in the US announced that they lost two of its hedge funds, preventing clients from withdrawing money. The Financial Crisis caused the bankruptcy of many institutions and became a global economic crisis. Businesses plummeted and the macroeconomy entered a recession in December 2007.



1. Jones, Charles I. (May 22, 2009). Global Financial Crisis: Overview. Retrieved from

The Global Capital Market

In 2008-2009, the world economy retrenched in the wake of a global financial crisis. Did the globalization of capital markets contribute to this crisis? If so, what can be done to stop global financial contagion in the future?

Bush Economic Policy and Currency Decline

The dollar has been getting weaker against other currencies ever since the Bush administration took office. The government did nothing to stem the decline. From the point of view of economic policy, what would you think was the reason?

Credit Markets and Global Economic Conditions

I would like a understanding in this area of economics Project the effect of credit markets on the economy. Project the effect of global economic conditions regarding trade and specialization business decisions.

Industry Study

Industry Studies Report the USA automobile tire market and international trade and why in 500 words. What country would you choose to trade with and why?

Environmental economics practice questions

1. Evaluate whether the following statements are true, false, or uncertain. Use specific models to support your answer where possible. . a. The theory of environmental regulation that involves endogenous politics is an example of a positive theory of regulation b. Although tradable permits and emission taxes both

Money and Banking

What factors led to the mortgage default crisis? How did mortgage defaults affect banks involved in mortgage lending and mortgage investing? Securitization? TARP? What do these mean? How did mortgage-backed securities spread losses during the mortgage default crisis? How does TARP illustrate the problem of moral hazard? What did

Porter's Five Forces Model

In 2009 the American auto industry is in a dire economic state. Chrysler is in Chapter 11, GM is on the brink of bankruptcy, and Ford's future is at best uncertain. The demise of the U.S. auto industry will have a devastating impact on our national economy and specifically the economies of Michigan and Ohio. Economists occa

Micro and Macro economics

1.Describe the changing economic variables in China that influenced McDonald's expansion strategies. 2. What market model best describes the relationship between McDonalds and KFC in China? Explain. 3.What factors led to the Mexican currency crisis and peso-devaluation in 1994? 4. Was Wal-Mart able to use the same strat

McDonald's in China /Wal-Mart in Mexico

McDonald's in China , describe the changing economic variables in China that influenced McDonald's expansion strategies. Wal-Mart in Mexico , describe factors that led to the Mexican currency crisis and peso devaluation in 1994.

Currency & trade agreement question

1. Discuss the advantages and disadvantages of having one world currency. 2.There are several trade agreements around the world which involve many countries. In North America, for example, there is the North American Free Trade Agreement (NAFTA). These trade agreements spell out the rules for trade amongst the nations whi

Keynesian Theory

1. At the insistent urging of President Obama, Congress has enacted massive spending bills totaling over $1 Trillion. This is sold to the public as "economic stimulus". What is the purpose of this orgy of spending? Explain the macroeconomic rationale for this action by the Federal government. 2. According to the (Keynesian)

Hypothetical international monetary regime

A possible international monetary regime consists of a world central bank conducting monetary policy and issuing a single currency used throughout the world. What would the advantages and disadvantages of such a system be?

Current economic conditions

Research Paper on Current Economics Problem Problem: Prepare a 350-700-word Business Research on Economics include the following: a. Define the business research and its purpose. b. Explain the business problem(s) under investigation. c. Describe the data collection method(s) d. What did the researchers conclude a

International Business

*How did the Mexican peso crisis differ from the Russian ruble crisis? *What was the role of the IMF in these two currency crises?

The Gasoline Market

1. Present the viability of the gasoline, considering the demand cost, market conditions, and economic conditions. 2 .Determine the market structure in which the selected good or service competes. 3. Discuss the implications of the market structure on pricing. 4. Suggest non-price strategies to preserve or enhance sales. 5.

Cycles of Financial Crisis

Explain the phases of financial crisis then briefly apply to: 1) LTCM, 2)Japanese Bubble,3) Southsea Bubble. Then explain discontent against the theory of constraints.

Macroeconomic Questions

A. Which are preferable and why, fixed, flexible, or a mixture of the two exchange rates? b. What countries have officially dollarized their economies. How does the US benefit from it? c. What is seigniorage?


3. Let's think about currency boards. Consider the Hong Kong Monetary authority which is the currency board for Hong Kong. The exchange rate is fixed at HK$ 7.75/US$ The balance sheet for authorized institutions in the banking sector in Hong Kong looked like this as of February, 1997: Banking System Assets

Does the Federal Debt Matter?

Does the Federal Debt Matter? -------------------------------------------------------------------------------- In very simple terms, is the current level of the federal debt that has been accumulated over the years a problem?