Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
History of the Federal Reserve System wikipedia , lookup
United States housing bubble wikipedia , lookup
Land banking wikipedia , lookup
Financialization wikipedia , lookup
Global financial system wikipedia , lookup
Shadow banking system wikipedia , lookup
ECO120 Macroeconomics Rod Duncan Lecture 2- Some actual economics Tutorial sign-ups – The tutorial sheets will be put up outside C2232 on Monday in the second week and on INTERact. Global financial crisis (GFC) • Late 2008 some financial problems started to appear in US and European banks. • Several banks and investment firms were bankrupt (not enough assets to cover their liabilities)- and had to be rescued by taxpayers. • This banking crisis translated into a macroeconomic crisis as banks started to cut back on their lending for new projects. Impact of the GFC • The GFC has had a major impact on the economies of developed and developing countries in late 2008 and 2009. • European countries and the US have been severely impact, but Australia has not been as badly affected. • Let’s see what the impact was, and then let’s try to understand what caused the crisis in the first place. Macroeconomic variables • The data we will look at over the next few slides are variables we typically study in macroeconomics: Gross Domestic Product (GDP), unemployment, employment, exchange rate, shareprice indices, etc. • The following data (up to March 2009) is from the Reserve Bank of Australia website at www.rba.gov.au. So what happened? • There is a lot of misinformation about the GFC floating about. The GFC has been blamed on capitalism, greed, stupidity, poor regulatory oversight, etc. • To a small extent, all of the above are partially correct. But the primary cause of the GFC was mortgage lending by banks to people who traditionally could not get home-loans- the poor. • Here’s how…