The sub-prime loans crisis and the recent turbulences in the credit markets (2008)

Type :

Presentation

Pages :

6 pages

Format :

.doc

Published date :

05/12/2009

Category :

Economics & finance

Sub category :

Finance

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Summary :

Introduction
The principles, the causes and the effects of the subprime loans crisis
1. The central concepts of the subprime loans crisis
2. The beginning of the crisis, in the real estate market and the banking system
3. The extension toward financial markets
The responses to the subprime mortgage loans crisis
1. The solutions and measures taken
2. The long-term and first-best solutions
Conclusion
Indicative bibliography

Abstract

The Russian economist Kondratiev has shown, in his theory of the cycles that in the economical life periods of economical recession followed periods of growth, and then followed by another period of growth, in an infinite cycle. The start point of these periods of recession is usually a great crash, or inflation, while the growth period's is defined as being a war, or a violent conflict between countries. If we apply this theory to the evolution of the global economy and the international equilibrium since the end of the Second World War, we can notice that we have seen a great period of growth since 1945 that lasted approximately thirty years. However, since the first oil crash in 1973, we have assisted to the multiplication of smaller or bigger crisis, thus enabling us to think that we are in one of the period of recessions developed by Kondratiev. The most recent one occurred in 2007, with a peak in august 2007, and is called the subprime mortgage loan crisis. This crisis has been described by the economists as a very risky situation, and some use the parallel with the one of 1929, which also started in the United-States and spread fast toward the rest of the world. But how did this crisis work, what were its causes, its effects, and the response that the public policy has developed to reduce its effects.