Credit crisis

...in 7 minutes...

BANK

3% 6%

profit

the “good old days”

“flat world” capital market1 mln 6%

60.000

4%

1.5 mln

3%

Freddy & Fanny

... how to raise profits???

sell at buy at houses

saved 6.00% 4.00% 200,000

1,000,000 60,000 1,500,000 8

5% 90,000 2,250,000 11

7% 135,000 3,375,000 17

10% 202,500 5,062,500 25

15% 303,750 7,593,750 38

23% 455,625 11,390,625 57

...more housing loans!

...more expensive houses

...new owners

.. but, what if they cannot repay?

.... we just sell their house!

Deutsche Bank in Cleveland

Cause > effect

Bad loans ↑ → Failure to pay ↑ Repossessions ↑→ Supply ↑ → Price ↓ → Lehman, Freddy, Fanny, etc could not re-pay their debt → ....

+/- $1..TRILLION lost....

2007-10-09 2008-09-12

Wave hits Japan

JP

CHN ME

financial sector > real economy

What happened?

Solution?

BAILOUTS?..... brings money back into the same system....... restores the MADNESS

Conclusion .....

Bubble built on belief that (housing) prices would never go down...

Financial world is 'flat' & greed is a global phenomenon

Next bubble is just around the corner...