(1) Bubble increase of the housing industry.
Following is the background of Bubble increase of the housing market.
Easy Money Policy of FRB(Federal Reserve Board)
In the housing industry of USA formed mortgage-system, the interest-rate is the factor that decide market price and adjust the demand and supply of the housing market, and also is main channel of currency policy.
After 『dot-com
of the population. Korea is not an exception. Emerging from the 1997-98 Asian currency crisis, banks have tended to provide more loans to households. Then household loans drastically increased and this consequently produces 'House Poor' who is suffer from the housing problem(burdened by mortgage and loan debt). The house poor problem is pandemic in Korea. Thus, we are still suffering from the cre
of the population. Korea is not an exception. Emerging from the 1997-98 Asian currency crisis, banks have tended to provide more loans to households. Then household loans drastically increased and this consequently produces 'House Poor' who is suffer from the housing problem(burdened by mortgage and loan debt). The house poor problem is pandemic in Korea. Thus, we are still suffering from the cre
1. What is subprime mortgage?
- America’s mortgage rating agencies categorize
people with a credit score into three classes.
The lowest of these is “subprime”
2. Why was subprime mortgage a significant influence?
- Lehman made financial derivatives like MBS,
CDO and CDS with reorganized loans from
subprime mortgages. These caused Lehman
Brother’s debt to grow astr
of monthly change in net interoffice account and the ABX AA 07-1 index of implied subprime mortgage security prices. The ABX index summarizes the information from polls taken from dealers who quote prices for credit default swaps (CDSs) on various tranches of collateralized debt obligations built on subprime residential mortgages. There is a negative relationship between the two, suggesting that
of HSBC
The second part of this section is the analysis of the assets and liabilities of HSBC. In 2006, before the crisis two thirds of the increases in the balance sheet were due to the trading assets. This was primarily driven by an increase in holdings ofdebt securities. HSBC’s operations in Europe, reported a rise in the credit risk arbitrage portfolio reflecting strong investor demand
of some assets, forgiveness of some debt, and a generous repayment schedule over time. Things rarely work out well for the debtor, and the vast majority of Chapter 11 cases either result in the largest lender owning the company at the end, or the company changing its plan to one of liquidation. Just because the goal is liquidation does not mean the debtor must convert to Chapter 7; they are sai
excess liquidity and bubble economy caused by cheap money policy
-IT bubble collapse and recession caused by 911
-explosive increase of housing loan caused by low interest policy
-ultra low interest → excess liquidity → bubble economy
Sub-prime and collapse of housing bubble
home mortgage raised spending but created consumer debt
housing boom turn into bubble
default on mor
of the stock of Apple Inc.? We acquired some hints from these graphs.
This is a graph for 3 years from February 2008 to November 2010. The 3 lines which are blue, red, and green represent Nasdaq, S&P 500 and Apple Inc. As we can see, Apple Inc moved together with other two types of index even though the stock price was different. For example, in the sub-prime mortgage, the performance of thes