Questions tagged [financial-crises]

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Are IMF interventions in currency crises good leading indicators for the performance of financial assets in that country?

The point in time during a currency crisis when the IMF finally steps in tends to be relatively close to the trough of the crisis - at least it seems that way anecdotally. Is there any research that ...
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38 views

“The odds of a bailout in the next century are still nearly 70%.”

In a 2017 Wall Street Journal op-ed, President of the Minneapolis Fed, Neel Kashkari, wrote: The odds of a bailout in the next century are still nearly 70%. I found it surprising that anyone could ...
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9 views

Lehman brothers bond rating

Correct me if I'm wrong, but as far as I understand one of the greatest causes of the 2008 financial crisis revolved around the way Lehman brothers where rating mortgage-backed securities (giving a ...
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1answer
162 views

Was the 2008 financial crisis caused more by the US subprime mortgage lending or more by an international energy and oil pricing crisis?

I recently read The Big Short by Michael Lewis in which the depiction of the role of subprime mortgage lending in the US and then run away speculation on CDOs are shown to be the central and primary ...
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1answer
57 views

Collapse of Lehman Brothers: What did they have in their books?

What kind of products did Lehman Brothers have on their books that caused the collapse? Do we have access to data on this topic?
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23 views

Is quantitative easing part of the ECB's and Fed's mandates?

Is quantitative easing part of the ECB's and Fed's mandates or is it an exceptional policy that they used, especially in the financial crisis 2007-2008?
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1answer
66 views

Decline in the Value of the Domestic Currency

I am using Mishkin's textbook "Economics of Money, Banking and Financial Markets." On the chapter on financial crises, the authors list a number of factors that could trigger a crises. One factor is ...
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1answer
53 views

Asset Market Effects on Balance Sheets

I am currently using Mishkin's textbook "Economics of Money, Banking and Financial Markets." The chapter on financial crises starts with the causes of financial crises. One reason given is the ...
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24 views

When is the pegged price equal to the market price

Suppose the government pegs an exhaustible resource, at a price $P^*$. I found out that the shadow price (initial price of the resource if government didn't peg) would be $$Q_t = ( \sigma i S_t )^\...
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2answers
154 views

How did the derivatives market 'collapse' in 2008?

I just watched the film 'The big short', and have been trying to think in context with the financial markets in 2008. I think the film does a great job of explaining how sub-prime mortgages came to be ...
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54 views

How have central banks been injecting currency after crises since 2007?

In an article by Jean-Michel Naulot about the 2007–2008 financial crisis, I read (my translation): Although central banks had an exemplary reaction at the time of the [2007–2008] crisis, they ...
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87 views

What should the Euro regulators look for and monitor to prevent a Euro crisis? [closed]

What should the Euro regulators look for and monitor to prevent a Euro crisis?
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97 views

Episodes of Housing Crashes and Never Recovering

Looking at many housing markets in major cities around the world today it looks like most (London, New York, Sydney, Beijing, Toronto,...) have become totally detached from the earnings of the local ...
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5answers
239 views

Why recent crises all started with a housing bubble?

I was writing some notes about the last economic and financial crisis and I noticed that all these recent crisis start with a housing bubble. Beside the 2007-08 US's one, also Japanese crisis in the ...
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111 views

Why did the hybrid Phillips Curve become flatter (as empirical data shows) after the crisis?

The Phillips Curve equation is: $$\pi_t=\pi_t^e + \beta_1 (\beta_2 Y_t + (1-\beta_2) Z_t) + \varepsilon_t^\pi$$ where $\pi_t$ is the inflation, $\pi_t^e$ is the expected inflation, $Y_t$ is the output ...
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28 views

In which cases prior to the Greek crisis did the IMF admit mistakes in it's economic policies?

Has the IMF ever admitted mistakes on it's economic policies prior to the Greek crisis?
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32 views

Did the financial crisis affect the retirement patterns of Baby boomers?

Baby boomers are retiring and have been for a few years already. The financial crisis potentially made a large fraction f them change their retirement plans. Is there some measure / study of this ...
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1answer
158 views

What do economist state as evidence that “structural reform” works?

The typical recipe for countries to improve their growth rate and escape high indebtedness is to reduce expenditure and implement structural reform. What do people use as evidence of structural reform ...
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163 views

What are the indicators of a country being in a financial crisis

What are the indicators of a country being in a financial crisis? I would like to know both about the acute and recovery phase. I am trying to make a point to our company that we are not growing ...
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2answers
143 views

What analysis has been done to predict the next big financial crash?

There has been a lot of talk about a big pending financial crash due to the slowing global economy, low interest rates, rising debt levels, etc. Now I'm wondering: Has anyone done any analysis to ...
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1answer
128 views

Is it correct to say that wealth is “destroyed” when an asset bubble bursts?

I was reading this article from the World Economic Forum, when I came across this passage: When the global equity and real estate markets hit their lowest points in March 2009, \$34.4 trillion of ...
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2answers
582 views

What actually went wrong in the economy as described by “The Big Short”?

Part of my personality is Engineering, so I look for root causes. I suppose that the cause of any bubble is "speculation", which just means pretending that ghosts are real, or that the word "LION" is ...
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163 views

Authoritative Books on Subprime Mortgage Crisis

I'm looking to learn more in detail about the situations and actions that setup the sub-prime mortgage crisis. In particular I'm looking for an authoritative book or books that provides a multifaceted ...
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1answer
161 views

Bond market vs stock market during crisis

Why does bond market not change as much as the stock market during financial crisis? On the picture we see the development of the two markets
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144 views

Financialization of the economy

What is the financialization process of wealth in the economy? What are the determining factors? What are its consequences? What is the role of financialization in the economic crisis of 2008? ...
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1answer
500 views

Could debt cause inflation instead of deflation?

It is well known that debt can cause deflation, especially during crisis: to repay their debts agents sell their goods which causes a fall in prices. But if there is no crisis and agents "have the ...
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3answers
526 views

If I don't pay a debt, then the creditor takes my goods. Why, then, do Greek creditors not take Greece?

Normally, when you don't pay a debt, your creditors take your goods (house, car, etc...). If Greece cannot pay its debt, can its creditors take Greek goods (structures, cities, industries, lands, etc....
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82 views

Have the Greek bailouts been included in state budgets Eurozone members?

A lot of people (mainly journalists and politicians) say that Eurozone taxpayers pay for the Greek bailouts. On the other hand, a lot of economists say that those money have not been added in the ...
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1answer
78 views

What happens to the billions in Euros that Greece owes if it leaves the Euro

Greeces owes billions of Euros to the IMF and European Union. What happens to those debts if it leaves the Euro? Do the debts get translated into Drachma or can the government just print Drachma to ...
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85 views

Large banks collapsing verses a single countries economic decline [closed]

Please excuse anything i get wrong here i am in no way a economics expert but i am interested in the subject. Earlier today I saw someone make a post about how banks like CitiGroup have been given $...
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1answer
50 views

Could the Troika's economic plan work for Greece?

There are a number of things that are confusing me about the current Greek financial crisis. The first is this. Is it plausible that if Greece did everything the Troika asked then the Greek ...
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138 views

Why shutdown the banks (Greece)?

What benefit is there to shutting down the banks in Greece? It seems that this would do more harm than good. Won't this impede economic growth by not allowing companies and startups access to capital? ...
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3k views

Larry Summers on the causes of secular stagnation

In an influential speech on November 8, 2013 at the IMF Annual Research Conference, Larry Summers suggested that slow economic growth in the years following the 2007-2008 financial crisis might be due ...
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1answer
210 views

Understanding the impact of Subprime Mortgages crisis on investment banking

I'm interested to know the exact magnitude of impact of Subprime Mortgages crisis on major players in investment banking. In particular, how can I find data for percentage of revenue from Subprime ...
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1answer
91 views

The most frequent causes of economic downfall?

In retrospect what are the major parameters, most frequently causing countries' economy to reduce its size and/or growth. Global Financial Crisis? Regional instability? Local Banking Sector failure? ...
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789 views

Currency Devaluation and the causes of the Tequila Crisis

I was reading about some of the famous crisis that happened in the past and i came across "the tequila crisis" in mexico during 1994-96. As a background, The Tequila crisis (also known as the Mexican ...
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1answer
86 views

What assurances are there that the Federal Reserve does not give money to banks?

My understanding of the operation of the United States Federal Reserve Bank is that it invents dollars by a unilateral, unbalanced credit to its own account and then it loans this money to member ...
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1k views

List of EU banks that received state aid

Is there a list of EU banks that got state aid / bailed out since 2008 crisis? I know EU state aid commission approves the fundings to banks, but does anyone keep track of which banks are tapping into ...
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161 views

Unintended consequences from “fixing” the US financial system

Last year, I read the book The Bankers' New Clothes: What's Wrong with Banking and What to Do about It. The book explained some of the causes of the recent financial crisis of 2007-2009 and gave some ...
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153 views

How Do Economists Quantify Contagion?

In the context of international financial crises, what mathematical methods have Economists employed in order to quantify financial contagion? Note: For a working definition of contagion I'll use the ...