Lesson 6: Intro to the 2008 Financial Crisis

October 1, 2025

Review:

• Property Valuation Presentations

Presentation:

• Financial Crisis of 2008
  • Historical Context
    • Tech Stock Bubble (NASDAQ) bursts in Spring 2000
    • Tech job losses post-bubble weaken the economy
    • Bush II elected and takes office in Jan 2001
    • 9/11 and continued economic weakness
    • Wars in Afghanistan and Iraq
    • 2004 Election
    • Political pressure to stimulate economy
• • Housing Bubble
    • Began inflating in 2001
    • Low interest rate environment
    • Financial engineering of mortgage debt
      • Mortgage backed securities
      • Derivatives (aka “financial weapons of mass destruction” – Warren Buffet)
      • Alt-A, Subprime, NINJA
    • Academic models and theories
    • Hubris
  • Big Short Clips
    • Creation of Mortgage Backed Securities
    • Dr. Burry identifies Subprime risk (Margot Robbie)
    • Pitching the Big Short (Anthony Bourdain)
    • Synthetic Credit Default Options (Dr. Richard Thaler and Selena Gomez)

Assignment:

• Watch Money for Nothing: Inside the Federal Reserve