subprime+crisis次贷危机
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• Bank corporations: Companies value their mortgageassets (receivables) based on estimates of collections from panies record expe nses in the current period to adjust this valuation,increasi ng their bad debt reserves and reducing earnings. Rapid or unexpectedchanges in mortgage asset valuation can lead to volatility in earnings and stock prices. The ability of lenders to predict future collections is a complex task subjectto a multitude of variables .
Investors: Stocks or bonds of the entities above are affected by the lower earningsand uncertainty regarding the valuation of mortgage assets and related paymentcollection. Many investors and corporations purchased MB S or CDO asinvestments and incurred related losses
Policies of central banks
• Central banks manage monetary policy and may target the rate of inflation. They have some authority over commercial banks and possibly other financial institutions. They are less concerned with avoiding et price bubbles, such as the housing bubble and dotcom bubble.
IMPACT ON STOCK MARKETS
OnJuly 19,2007, theDow Jones Industrial Averagehit a record high, closingabove 14,000 for the first time. ByAugust 15, the Dow had dropped below theS&P 500had crossed into negative territory year-to-date. Similar drops occurred invirtually every market in the world, with Brazil and Korea being hard-hit. Large dailydrops became common, with, for example, theKOSPIdropping about 7% in one day,although 2007's largest daily drop by the S&P 500 in the U.S. was in February, a result of the subprime crisis
Thank you !
• Became apparent throughout 2007 and 2008.
Subprime Mortgage Crisis
Mortgage Backed Securities (MBS)
US Subprime Crisis
The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2008. It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages.
How did it happened?
Causes of Subprime mortgage crisis
Boom and bust in the housing market Low interest rates and large inflows of foreign funds created easy credit conditions for a number of years prior to the crisis, fueling a housing market boom and encouraging debt-financed consumption.
An Introduction to the Subprime Crisis in the U.S.
What is Subprime Crisis?
• The subprime mortgage crisis also translated as Debt crisis. It is an ongoing financial crisis triggered by a dramatic rise in mortgage delinquencies and foreclosures in the United States, with major adverse consequences for banks and financial markets around the globe. • Beginning in approximately 2005–2006.
Impact on home owners
• According to the S&P/Case-Shiller housing price index, by November 2007,average U.S. housing prices had fallen approximately 8% from their 2006 peak.However, there was significant variation in price changes across U.S. markets, with manyappreciating and others depreciating. The price decline in December 2007 versus theyearago period was 10.4%. Sales volume (units) of new homes dropped by 26.4% in2007 versus the prior year. By January 2008, the inventory of unsold new homes stood at9.8 months based on December 2007 sales volume, the highest level since 1981.
Speculation
• Speculative borrowing in residential real estate has been cited as a contributing factor to the subprime mortgage crisis. And it contributed to rising debt and an eventual collapse of asset values.
The Influence of American Subprime Crisis
• 1 IMPACT ON CORPORATIONS AND INVESTORS • 2 IMPACT ON STOCK MARKETS • 3 IMPACT ON HOME OWNERS
IMPACT ON CORPORATIONS AND INVESTORS
Investors: Stocks or bonds of the entities above are affected by the lower earningsand uncertainty regarding the valuation of mortgage assets and related paymentcollection. Many investors and corporations purchased MB S or CDO asinvestments and incurred related losses
Policies of central banks
• Central banks manage monetary policy and may target the rate of inflation. They have some authority over commercial banks and possibly other financial institutions. They are less concerned with avoiding et price bubbles, such as the housing bubble and dotcom bubble.
IMPACT ON STOCK MARKETS
OnJuly 19,2007, theDow Jones Industrial Averagehit a record high, closingabove 14,000 for the first time. ByAugust 15, the Dow had dropped below theS&P 500had crossed into negative territory year-to-date. Similar drops occurred invirtually every market in the world, with Brazil and Korea being hard-hit. Large dailydrops became common, with, for example, theKOSPIdropping about 7% in one day,although 2007's largest daily drop by the S&P 500 in the U.S. was in February, a result of the subprime crisis
Thank you !
• Became apparent throughout 2007 and 2008.
Subprime Mortgage Crisis
Mortgage Backed Securities (MBS)
US Subprime Crisis
The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2008. It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages.
How did it happened?
Causes of Subprime mortgage crisis
Boom and bust in the housing market Low interest rates and large inflows of foreign funds created easy credit conditions for a number of years prior to the crisis, fueling a housing market boom and encouraging debt-financed consumption.
An Introduction to the Subprime Crisis in the U.S.
What is Subprime Crisis?
• The subprime mortgage crisis also translated as Debt crisis. It is an ongoing financial crisis triggered by a dramatic rise in mortgage delinquencies and foreclosures in the United States, with major adverse consequences for banks and financial markets around the globe. • Beginning in approximately 2005–2006.
Impact on home owners
• According to the S&P/Case-Shiller housing price index, by November 2007,average U.S. housing prices had fallen approximately 8% from their 2006 peak.However, there was significant variation in price changes across U.S. markets, with manyappreciating and others depreciating. The price decline in December 2007 versus theyearago period was 10.4%. Sales volume (units) of new homes dropped by 26.4% in2007 versus the prior year. By January 2008, the inventory of unsold new homes stood at9.8 months based on December 2007 sales volume, the highest level since 1981.
Speculation
• Speculative borrowing in residential real estate has been cited as a contributing factor to the subprime mortgage crisis. And it contributed to rising debt and an eventual collapse of asset values.
The Influence of American Subprime Crisis
• 1 IMPACT ON CORPORATIONS AND INVESTORS • 2 IMPACT ON STOCK MARKETS • 3 IMPACT ON HOME OWNERS
IMPACT ON CORPORATIONS AND INVESTORS