Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Published in:
The Chinese Birdcage Read chapter Read first chapter

2016 | OriginalPaper | Chapter

5. The Global Financial Crisis

Author : Heleen Mees

Published in: The Chinese Birdcage

Publisher: Palgrave Macmillan US

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

By 2007, the first cracks in the financial ceiling started to show. The US housing market was over its peak, oil prices were spiraling out of control, and consumer confidence sank. As people started to lose their jobs, default rates on mortgages started to creep up, affecting initially the subprime mortgages, but later on, prime mortgages as well. In June 2007, two Bear Stearns hedge funds collapsed. It would take another year for the fire to spread to other Wall Street banks. After the collapse of Lehman Brothers, governments on either side of the pond scrambled to rescue their banks as European banks had invested heavily in American toxic mortgages. Amid the financial panic, the huge imbalances within the euro area became apparent too.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 390 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Maschinenbau + Werkstoffe




 

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
previous chapter Housing Bubbles Across the Western Hemisphere
next chapter The Economic Fallout
Footnotes
1
Median Usual Weekly Real Earnings, Federal Reserve Bank of St. Louis.
 
2
Federal Reserve Bank of St. Louis.
 
3
Price change between 2000 and 2008, FAO.
 
4
4-week Moving Average of Initial Claims, FRED.
 
5
Federal Reserve Bank of Chicago.
 
6
Greenspan, Alan, and James Kennedy, “Sources and Uses of Equity Extracted from Homes,” Federal Reserve, 2007.
 
7
Another explanation is that the housing market affects the general economy and people default on their home loans because they lost their job.
 
8
Wenli Li and Michelle J. White, “Mortgage Default, Foreclosures and Bankruptcy in the Context of the Financial Crisis,” 2009.
 
9
My own calculations using non-trade weighted data from the Federal Housing Finance Agency.
 
10
Gene Amromin and Anna L. Paulson, 2010.
 
11
Willem H. Buiter, “Rescuing the Bear: why and why this way?,” The Financial Times blog, March 14, 2007.
 
12
“Citi Chief on Buyouts: ‘We’re Still Dancing’,” The New York Times, July 10, 2007.
 
13
Michael Lewis, The Big Short, 2011.
 
14
On the Brink: Inside the Race to Stop the Collapse of the Global Financial System (2010),
 
15
“Revisiting the Lehman Brothers Bailout That Never Was,” The New York Times, September 17, 2014.
 
16
Later that month, Citigroup needed a full-fledged bailout in an asset-relief package worth $306 billion and a further $20 billion recapitalization on top of the earlier $25 billion with the US government ultimately ending up with a 40 percent stake in the Wall Street bank.
 
17
“Treasury Issues TARP Repayment Rules,” Business Insider, May 8, 2009.
 
18
“Measuring Agency MBS Market Liquidity with Transaction Data,” Federal Reserve, 2014.
 
19
“Bank Borrowing from the Federal Reserve and Purchases of Securities,” Congressional Research Service, 2011.
 
20
Article 103 of the EU Treaty holds that the Union shall not be liable for or assume the commitments of central governments.
 
21
“Sovereign liquidity facility: Transfer Europe or bank recapitalization fund? What is the EFSF meant to be?,” Citi Economics, Global Economics View, June 2010.
 
22
“Exclusive: Geithner to float idea of leveraging euro rescue,” Reuters, September 15, 2011.
 
23
Speech by Mario Draghi, President of the European Central Bank at the Global Investment Conference in London, July 26, 2012.
 
Metadata
Title
The Global Financial Crisis
Author
Heleen Mees
Copyright Year
2016
Book
The Chinese Birdcage

Print ISBN: 978-1-137-58888-3

Electronic ISBN: 978-1-137-58886-9

Copyright Year: 2016

DOI
https://doi.org/10.1057/978-1-137-58886-9_5