POLI 3P21 Lecture Notes - Lecture 9: 1997 Asian Financial Crisis, Four Asian Tigers, Financial Contagion
27 Dec 2015
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Inflation more $ chasing fewer goods, hence prices increase b: deflation = less $ chasing more goods, hence prices decrease, strong encouragement from imf/wb (3 form strategy including, cause: fast track capitalism. People first payment 5 grand but the mortgage is 495,000. Most payments he makes will go to the interest only: values of houses decrease: defaults abound, financial sector invested in subprime industry: lose their shirts, regulation: didn"t keep up, lack of regulation (1999) 1: some examples, collateralized debt obligations i. Investments back by loans (as assets) because we assume that people will pay it back. Belly up pyramid scheme: spreads risk acceptable only if no mass default. Tart program us: not congruent with market economy, failure should be weeded out. Institutions have become to big to fail: greed and stupidity, right circumstances: lets all make a quick buck, markets are social institutions and falliable.
