Lesson 7: Monetary Policy and the 2008 Housing Crisis

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September 11, 2016 at 7:21 pm  •  Posted in f16-econ491 by  •  0 Comments

Mon, Sep 12

Review:

  • ROI Analysis

Presentation:

  • Monetary Policy and the Housing Crisis of 2008
    • Historical context
      • Bush II elected and takes office in Jan 2001
      • Tech Stocks (NASDAQ) and tech jobs decline weakening the economy
      • 9/11 and continued economic weakness
      • War in Afghanistan and Iraq
      • 2004 Election
      • Political pressure to stimulate economy
    • Federal Reserve
      • Central Bank for the US and, in some ways, the World
      • Alan Greenspan
        • Federal Reserve Chairman (1987-2006)
        • Free market champion appointed by President Reagan
      • Ben Bernanke
        • Federal Reserve Chairman (2006-2014)
        • Promised to continue Greenspan policies
        • At the eye of the storm in 2008
      • Kept interest rates too low for too long (2001-2004)
    • Housing Bubble
      • Began inflating in 2002
      • Low interest rate environment
      • Financial engineering of mortgage debt
        • Mortgage backed securities
        • Derivatives (aka “financial weapons of mass destruction” – Warren Buffet)
        • Subprime, Alt-A, NINJA
    • Money for Nothing: Inside the Federal Reserve

Assignment:

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