By Sameer

ONE Q: HOW IT STARTED ONE Q: HOW IT STARTED ? ? 11

American Banks Have Excess Pool Of FundsAmerican Banks Have Excess Pool Of Funds They Formed Institutions NamedThey Formed Institutions Named

Foreign Institutional InvestorForeign Institutional Investor Entered The Emerging Markets With Lots Of Entered The Emerging Markets With Lots Of

MoneyMoney

Resulted In Unnatural Growth Of Stock Markets Resulted In Unnatural Growth Of Stock Markets GloballyGlobally

Decades Of Outsourcing Have Devastated The American Manufacturing Base.

As A Result The Monster That The USA Has Created In The Name Of Outsourcing And Offshoring, Has Grown So Big And Powerful, That It Is Now Impossible For The US Companies To Become More Competitive Than These Low Cost Countries.

ONE Q: HOW IT STARTED ONE Q: HOW IT STARTED ? ? 33

Bursting Of The United States Housing Bubble

Reason: High Default Rates

Subprime Losses

HERE COMES FINANCIAL COMPANIES

LENDING MONEY TO THESE PEOPLE

• Mortgage Backed Securities (MBS)Mortgage Backed Securities (MBS)

MBS is an asset-backed security whose cash flows are backed MBS is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage by the principal and interest payments of a set of mortgage loans.loans.

• Collateralized Debt Obligations (CDO)Collateralized Debt Obligations (CDO)

CDOs are an unregulated type of asset-backed security and structured credit product. CDOs are constructed from a portfolio of fixed-income assets.

Inability of homeowners to make their mortgage payments.

Poor judgment by the borrowers &/or lenders. Speculation & Overbuilding during the boom

period. Lack of Government Regulation Risky Mortgage Products

Once investments in the US turned bad, more money had to be invested in the US, to maintain that fixed proportion.

In order to invest more money in the US, money had to come in from somewhere. To make up their losses in the sub-prime market in the United States, they went out to sell their investments in emerging markets where their investments have been doing well.

Global Markets Down

Excessive Leverage Is Always Bad in Long Term.

Stay Away From Loans And Credit Cards

Thank You