1.What cause the housing market to drop in stock prices and loans? Bear Sterns invested in a large amount of houses,and there was not enough people to buy houses.
2. What lead to Bear Sterns financial problems? Bear Sterns increased the mortgage of people's houses when the economy fell which caused Bear Sterns to have a bad name. Investors stoped loaning to Bear Sterns because of this.
3. Name two rumors that the media reported about Bear Sterns. The media spread rumors of liquidation and that Bear Sterns was running out of money.
4. What deal did the Federal Reserve strike with Bear Sterns that temporarily saved the company? The Federal Reserve wanted to make a deal with Bear Sterns they wanted Bear Sterns to sell there company and in return they would take responsiblity for 30$ billion of Bear's depts.
5.Why did Congressmen Paulson believe that the Federal Reserve needs to let these Financial Institutions fail? Congressmen Paulson was concerned about helping only Bear Sterns. He didn't want it to look like they were only trying to save this company it would be a moral hazard.
6.Why did the federal government take over Fannie Mae and Freddie Mac? They held a large amount in mortages and were a huge company. Losing this company was too big it was a system risk.
7. Secretary Paulson decided not to guarantee a government loan for Lehman Brothers as he had for Bear Sterns with the JPMorgan takeover . What happened as a result of that decision? Lehman went bankrupt but no one thought it would cause a problem. It turns out that the Lehman brothers were very connected , and it caused a system failure the stock crashed.
8. Why did the govenment give AIG a loan of $85 billion after refusing to loan money for the Lehman Brothers acquisition? AIG was the biggest insurance company in the world. AIG invested in the housing market thinking it was never going bankrupt the government stoped caring about moral hazard and decided to take over AIG.
9. What is capital injection?Money coming from the government. Billions of dollars injected to boost confidence.
10.The last scene in the film shows the leaders of the largest banks being told by Henry Paulson that they would have to accept government capital injections. What was the rationale for that decision. They had run out of ways to save the economy. There was nothing else they could do they thought if they didnt act fast it would sink too far deep to be restored.
Friday, August 28, 2009
Wednesday, August 19, 2009
8-19-09
Stock-in my own words a stock is a piece of a company that can be sold/trade
During the game of "Pit" i won once my strategy was simply to keep the stock with the most on first draw.
Based on the game today i would consider being a stock broker just because it sounds like a exciting job with alot of competition and a chance for something great.
During the game of "Pit" i won once my strategy was simply to keep the stock with the most on first draw.
Based on the game today i would consider being a stock broker just because it sounds like a exciting job with alot of competition and a chance for something great.
Tuesday, August 18, 2009
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