...Contexte général Un environnement extrêmement volatile marqué par l’incertitude sur les évolutions probables à l’avenir Une crise internationale majeure : 25.000 milliards de dollars engloutis dans la débâcle boursière, 1.400 milliards de dollars de pertes dans les bilans bancaires dues aux dépréciations d’actifs, Un plan de sauvetage du système bancaire de 700 milliards de dollars aux USA (plan Paulson) alors que les créances douteuses s’élèvent à 60 000 milliards de dollars, Une recapitalisation des banques européennes de l’ordre de 550 milliards d’euros. Des crises financières de plus en plus rapprochées L’élément déclencheur La crise des subprimes est considérée comme l’élément déclencheur de la crise économique. Avec des mécanismes tels que: En 2003/2004 baisse des taux d’intérêts par la FED Distribution agressive de prêts Augmentation des achats immobiliers à crédits Nombreux prêts à risque : « Une maison prend toujours de la valeur » On assure le crédit grâce à l’hypothèque. Ces créances sont transformées en produits financiers. Ces produits financiers sont introduits en bourse et vendus à des investisseurs privés. Pour attirer les investisseurs ces produits sont assurés. En 2006 ralentissement de la croissance du marché immobilier. Les hypothèques ne garantissent plus les emprunts. Les emprunts ne sont plus remboursés Les investisseurs s’affolent Les assurances n’ont pas les fonds pour...
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...As far as we know, there were more than five economic and financial crises during the recent 200 years. Society was suffering from such downturns, because each of them had its own characteristics and consequences which affected the whole economic world. In the next passages I would like to tell you about the history of financial crises and about the solutions made by governments and departments which helped to reduce the bad effects of it. Not a single year has gone by in the past two centuries where there was not a financial crisis somewhere in the world (see figure 1). Arguably, the world witnessed its first international financial crisis in 1825. The opening up of Latin America after the overthrow of the Spanish empire led to the opening up of international trade between England and the Latin American republics. The result was massive capital flows from London to finance infrastructure, mining and government spending. But once the capital outflows impinged on the Bank of England’s (BoE) gold reserves, the policy rate was raised, leading to a banking crisis. A sudden stop of capital flow from London resulted in banking panics in the US and currency crashes across Latin America. Figure 1: The history of financial crises Indeed, the crisis in 1825 marked the first of seven clusters of sovereign defaults in the period 1800 to 2010 In the first cluster of defaults, which happened during 1824-1834, 13 Latin...
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...beyond national borders, whilst increasing the interconnectedness of different markets and cultures. These economic ties come in the forms of international trade, foreign direct investment and monetary integration, made possible with the complementary increase in the interdependence of international financial markets. With further liberalization and deregulation, financial market interdependence grew in momentum alongside the worldwide capital mobilization. This growing interconnectedness of all the world financial markets and the degree of their interdependence have themselves created a subject of substantial interest among economists. The recent global financial crisis has only elevated this interest further, as the impact of U.S. subprime crises on the world economies have provided evidence of global financial markets interdependence. Many international stock markets, for example, experienced their worst abrupt declines in their history with drops of around 10%, triggered moments after the collapse of Lehman Brothers hit the U.S. financial markets. Even the Bursa Malaysia KLCI was not spared, dropping to its lowest point in...
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...Zombie Bank The book presents an in-depth overview on what a zombie banks is, why they are allowed to operate, and why the approach will inevitably fail. Through the use of exclusive reports from bank executives, regulators, politicians, and policymakers, Onaran takes the reader on a global tour of these banks—which are being kept alive in countries from the United States to Germany, Spain, and Japan. Two of the largest, Bank of America and Citibank, are in the United States. In Zombie Banks, the author has shown us the practice of zombie banking, explained why it does not work, and laid out the steps needed to rid the global financial community of these dangerous institutions. Zombie bank started to appear in 1990s with the huge declining of the price of real estate and stocks. It pulled every Japanese banks into huge bad debt situation. However, Japan refused to accept the suggestion from the US and took a way that government secretly support those bad debt banks instead of bankrupt. This solution do nothing good to the improvement for its financial situation and made Japan’s economy depressed for a decade. While covering the collapse of Lehman Brothers and Bear Stearns in 2008, Onaran discovered that no one within those organizations had the complete picture of how the companies functioned and, therefore, no one had any answers. Zombie Banks is Onaran’s attempt to connect the dots that make up the current global financial landscape. Zombies are...
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...Throughout the history and even today we often hear about the term financial crisis. Every day on the news we can hear about the financial crisis in some countries and how they are trying to prevent it or to get out of it. Especially about the financial crisis in Greece. So what exactly is financial crisis? There have been a lot of definition of what financial crisis is, but they all agree in one thing financial crisis appears when some institution or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crisis include stock market crashes and the bursting of other financial bubbles, currency crises and sovereign defaults. There a lot of types of financial crisis: banking crisis, speculative bubbles and crushes, wilder economic crisis and other crisis. But from all of them, today the most frequent financial crisis is the banking crisis. This happens when a lot of the depositors withdraw their deposits from the bank, causing the bank to bankrupt. This kind of crisis happened in 2007-2008,also known as the global financial crisis and 2008 financial crisis. This crisis is considered by many economists to be the worst financial crisis since the Great Depression. This crisis was called the worst because it was spreading really quickly all around the world. But what causes this kind...
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...Syndicate group assignment What were the origins of the Asian currency crisis? The Asian currency crisis was a period of financial crisis started in Thailand in July 1997. Many Asian countries experienced a financial crisis are a large drop in the value of its currency and a large drop in its traded equity prices. Before the crisis happened, many Asian countries produced a dramatic reduction in poverty and rapid economic growth. Behind the boom, there are lots of imbalances: large current account deficit was financed increasingly by short-term inflow; the real exchange rate had appreciated to an unsustainable level; and export growth had slowed obviously. Based on a literature review, a great deal of effort has been made to trying to understand the origins of the crisis. One view is that weaknesses in Asian financial systems were at the root of the crisis. The lack of incentives for effective risk management created by implicit or explicit government guarantees against financial failure caused the weaknesses. The large capital inflows, rapid economic growth and pegged exchange rates also accentuated the weaknesses of the financial sector. An alternative view is that there was not anything wrong with East Asian economies with historical good performance. The large capital inflows to finance productive investments made them vulnerable to a financial panic. The inadequate policy responses to the panic caused the financial crisis and the...
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...IT and International Real-Time Media: Amplifier for a Crisis or Instrument of Rational Decision-Taking Narelle Gomes, Christian Piechorowski 09.01.2014 Table of contents: 1.1 Information technology’s impact in the development of the stock exchange 1.2 Algorithmic trading 1.3 High frequency trading 1.4 High frequency; trading beneficial or harmful for the economy? 1.5 Final Remarks 2.1 The Influential Role of Mass Media - The Pervasiveness of the information disseminated on the people 2.2 Financial Crisis- A media spectacle? 2.3 The mishaps of European Media during the current Euro crisis 2.3.1 The alternative view of the media; Citizens mistrust towards the media 2.3.2 The wavering power of mainstream amidst its pervasiveness 3. Conclusion Introduction Problem Description: The world financial crisis started in the US with the burst of the housing bubble in 2007. However, it was not just limited to the US border, but it rapidly spread all over the world. Consequently, many banks went bankrupt and some countries were even pushed into a financial downturn. Target of Study: This essay will not provide a general outlook on the financial crisis but instead examines the impact of the Real time media and IT on this economic crisis of historic scale. How important...
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...has inherent risk management tools to prevent the crisis. This paper attempts to examine the root of the financial crisis and find the solution from Islamic finance principles. Keywords: Financial crisis, Derivative, MBS, CDO, CDS, Islamic finance 1 Corresponding author can be contacted by email: miranti_k_dewi@yahoo.com. “The credit and capital markets have grown too rapidly, with too little transparency and accountability. Prepare for an explosion that will rock the western financial system to its foundations.” (Barberton and Lane (1999) INTRODUCTION As mentioned by Barberto and Lane (1999), the explosion just became a reality. Though the crises in the US and Europe were one of the crises series which regularly hit the world starting from the 20th century,...
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...THE EAST ASIAN CRISIS Introduction: The East Asian crisis was a period of financial crisis that gripped much of Asia which beginning in July 1997 and raised fears of worldwide economic meltdown due to financial contagion.1 Several countries such as Malaysia, Thailand, Indonesia, the republic of Korea and the Philippines were hit directly while others such as Taiwan province of China, Singapore and especially Hong Kong, China were badly affected. What began as a speculative attack on the Thai baht in July 1997 quickly spread as ‘contagion’ to the other countries. Over a three-month period between July and October 1997, the baht fell nearly 40 per cent, the Malaysian ringgit and Philippine peso by about 27 per cent, the Indonesian rupiah by about 40 per cent and the Korean won approximately 35 per cent against the United States dollar. For countries that had been dubbed “miracle economies” this was a serious blow with wide-ranging economic, social and political ramifications.2 In this paper we would try to undertake an empirical analysis of the factors leading to the crisis by analysing on two major points: 1) How have these countries performed in the years leading to the crisis? 2) What was the policy response to the currency crisis and what similarities/differences were there in policy responses across countries? We try to do this by analysing the macroeconomic data of three countries, Malaysia, Thailand and the Republic of Korea, over a 13-year period, from 1990 to 2002. The...
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... Indeks: 9532 Strumica,dekemvri 2012 Throughout the history and even today we often hear about the term financial crisis. Every day on the news we can hear about the financial crisis in some countries and how they are trying to prevent it or to get out of it. Especially about the financial crisis in Greece. So what exactly is financial crisis? There have been a lot of definition of what financial crisis is, but they all agree in one thing financial crisis appears when some institution or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crisis include stock market crashes and the bursting of other financial bubbles, currency crises and sovereign defaults. There a lot of types of financial crisis: banking crisis, speculative bubbles and crushes, wilder economic crisis and other crisis. But from all of them, today the most frequent financial crisis is the banking crisis. This happens when a lot of the depositors withdraw their deposits from the bank, causing the bank to bankrupt. This kind of crisis happened in 2007-2008,also known as the global financial crisis and 2008 financial crisis. This crisis is considered by many economists to be the worst financial crisis since the Great Depression. This crisis was called the worst...
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...TABLE OF CONTENT | PAGE | | 1.0 | Introduction | 1-2 | | | 1.1 | Bank CEO incentives | 2 | | 1.2 | Credit Crisis | 2 | | | | | 2.0 | Bank CEO incentives were the major factor in credit crisis | 2-5 | 3.0 | Conclusion | 6 | | | | 4.0 | References | 7 | 1.0 Introduction Bank CEO and the credit crisis was it related to each other? There is a statement which is ‘Bank CEO’s incentives were a major factor in credit crisis.’ First of I would like to explain a few terms in the topic. A CEO stand for Chief Executive Officer meanwhile, incentives here doesn’t only mean money or material incentives. It also includes motivation either positively or negatively towards the CEO. Therefore, the statement says that the lack or abundance of incentives to the CEO is the major factor for the past credit crisis. CEO incentives were not the major cause for the credit crisis based on my research from the journals and articles. I totally oppose these because I have gathered valuable evidences from journal and articles that I have read online. 1.1 Bank CEO Incentives There are several titles for the position Chief Executive Officer (CEO) such as Managing Director, Executive and President. The responsibility of CEO is different from one another according to their size, scope of work and an organization. CEO plays an important role by making a decision, hiring of staff. Besides that, CEO will have communication deal with board of directors and corporate...
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...here are conflicting views on how the global financial crisis is affecting medical tourism. The view expressed by organisations such as the Medical Tourism Association is that the "...with the economy and the credit crisis, more people are waking up and paying attention (to medical tourism)." The harsh reality may be somewhat different. BusinessWeek reports that "...in some medical tourism hotspots, formerly booming hospitals are seeing empty beds." The MD of Parkway Hospitals in Singapore, "expects the foreign patient numbers to stabilise after dropping 10 per cent". Whether the credit crunch encourages more people to consider travelling abroad for treatment remains to be seen. People are short of cash, unable to borrow and are delaying expenditure on house purchases, cars and other major expenditures. Healthcare is not immune to this. Although in the last global recession, healthcare was less affected, the likelihood is that people who might have considered medical tourism may decide to postpone their expenditure. Areas likely to be affected most are those “non-urgent”, discretionary treatments such as cosmetic surgery. In countries where medical tourism is influenced by waiting lists, patients may decide to hold out for free treatment in their own country rather than go for the paid for, immediate treatment available elsewhere. In the USA, the story may be different, as the financial crisis puts pressure on health insurers and employers to find ways to cut rising healthcare...
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...Journal of Contemporary Eastern Asia ISSN 2383-9449 Fumitaka Furuoka, Beatrice Lim, Catherine Jikunan and Lo May Chiun (2012) Economics Crisis and Response: Case Study of Malaysia’s Responses to Asian Financial Crisis Journal of Contemporary Eastern Asia Vol. 11, No. 1: 43-56 Journal abbreviation: J. Contemp. East. Asia Stable URL: http://eastasia.yu.ac.kr/documents/Fumitaka_11_1.pdf www.JCEA-Online.net Open Access Publication Creative Commons License Deed Attribution-No Derivative Works 3.0 Journal of Contemporary Eastern Asia, Volume 11, No.1: 43-56 http://dx.doi.org/10.17477/jcea.2012.11.1.043 Economics Crisis and Response: Case Study of Malaysia’s Responses to Asian Financial Crisis Fumitaka Furuoka, Beatrice Lim, Catherine Jikunan and Lo May Chiun The paper chooses the “Asian Financial Crisis” as a case study to examine its impact on Malaysian economy and describes how Malaysian government responded to the crisis. It also focuses on the Asian financial crisis’ impact on the employment of banking sector in Malaysia. In the finance, insurance, real estate and business service sector, a number of 6,596 workers were retrenched. Banks were forced into mergers and acquisition as well as downsizing, trim lean, organizational changes and introduction of new technologies. Excess workers were offered a “voluntary separation scheme.” These retrenched workers became the urban poor facing high cost of living and no opportunity for jobs as there is no safety net provided. 1. Introduction...
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...can be traced by past experience from different countries around the world as usual. Their book and working papers introduce massive historical database which have constructed to study the debt (both external and internal), banking crisis, inflation, currency crashes and so forth. There are sixty-six countries included in the data, such as Africa, Asia, Europe, Latin America, North America, and Oceania (Reinhart and Rogoff, 2008). They studied various types of financial crises, however, the book mainly includes sovereign defaults and banking crises as these two forms of crises are particularly relevant to modern society. They covered government debt defaults in eight centuries all over the world as the title of the book. Basically, their views in term of the financial crisis in 2007 and 2008 are that the U.S Subprime Meltdown and the so-called ‘ The Second Great Contraction’ was inevitable. They criticized that if the policy markers could do some research on the recent history of financial crises, then the whole society might have some protection about it....
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...09-093 July 22, 2009 The Global Financial Crisis of 2008 – 2009: The Role of Greed, Fear and Oligarchs Cate Reavis Free enterprise is always the right answer. The problem with it is that it ignores the human element. It does not take into account the complexities of human behavior. 1 —Andrew Lo, Professor of Finance, MIT Sloan School of Management The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy. 2 —Simon Johnson, Professor of Entrepreneurship, MIT Sloan School of Management, Former Chief Economist, IMF On October 9, 2007 the Dow Jones Industrial Average set a record by closing at 14,047. One year later, the Dow was just above 8,000, after dropping 21% in the first nine days of October 2008. Major stock markets in other countries had plunged alongside the Dow. Credit markets were nearing paralysis. Companies began to lay off workers in droves and were forced to put off capital investments. Individual consumers were being denied loans for mortgages and college tuitions. After the nine day U.S. stock market plunge, the head of the International Monetary Fund had some sobering words: “Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.” 3 1 2 3 Interview with the case writer...
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