depression credit crisis

BellworkBellwork• Identifying a sick person is usually

easy. -How can you identify a sick economy? -What factors are you looking for? (3 sentences minimum)

• Identifying a sick person is usually easy. -How can you identify a sick economy? -What factors are you looking for? (3 sentences minimum)

The Great DepressionThe Great

Depression

Chapter 22 section 2Chapter 22 section 2

Great DepressionGreat Depression

• What words do you associate with depression?

• Do part A of your worksheet(Check a column for each term)

• What words do you associate with depression?

• Do part A of your worksheet(Check a column for each term)

ObjectivesObjectives

• Link elements of the Great Depression to the modern economic situation

• Analyze the effects of the US Depression on the world economy

• Link elements of the Great Depression to the modern economic situation

• Analyze the effects of the US Depression on the world economy

Boom!Boom!

• Due to prosperity of 1920s

–People grew and made more than they could sell

• Industries that grew in WWI lose

–R/Rs, textiles, steel

• People were living on credit

–Buy now, pay later

• Due to prosperity of 1920s

–People grew and made more than they could sell

• Industries that grew in WWI lose

–R/Rs, textiles, steel

• People were living on credit

–Buy now, pay later

Stock MarketStock Market

• Dow Jones had gained nearly 300 points in 5 years

–Was at 381, up from 100

• People bought under speculation

–Trying to make quick profit

• Some borrowed to buy stocks

• Inflates company value

• Dow Jones had gained nearly 300 points in 5 years

–Was at 381, up from 100

• People bought under speculation

–Trying to make quick profit

• Some borrowed to buy stocks

• Inflates company value

Peak and FallPeak and Fall

• Prices hit an all-time high

–People tried to profit

–Others saw it as a collapse; sold

• September 1929, Stocks crash

• October 1929, massive selloff

• Marks the start of the Depression

• Prices hit an all-time high

–People tried to profit

–Others saw it as a collapse; sold

• September 1929, Stocks crash

• October 1929, massive selloff

• Marks the start of the Depression

Bank EffectBank Effect

• Banks make money how?

–People were scared, withdrew

• 11,000 / 25,000 disappear: 3 years

• No insurance; fortunes lost

• Businesses crash, jobs gone

• Banks make money how?

–People were scared, withdrew

• 11,000 / 25,000 disappear: 3 years

• No insurance; fortunes lost

• Businesses crash, jobs gone

World AffectedWorld Affected• Europe had to worry about paying

off war debt–Germany: reparations

• Americans couldn’t afford European goods any more–Europe loses money

•Joins Great Depression on their own

• Europe had to worry about paying off war debt–Germany: reparations

• Americans couldn’t afford European goods any more–Europe loses money

•Joins Great Depression on their own

Hey dude! Would you like

to own a house?? A house

you can call home??

Come on, don't gimme

that Reh-tarded look.

You know you can have it!

But....but...I don't 'ave any mooney!

!

But....but...I don't 'ave any mooney!

!

Who on earth gave you the idea that you need money

to buy a house???

But....but...I don't 'ave any mooney!

!

Who on earth gave you the idea that you need money

to buy a house???

All you need is to D-R-E-A-M

andD-R-E-A-M

BIGG!!

unn..umm! Sorry, I din't

attend school !! I tend to assume certain things...

unn..umm! Sorry, I din't

attend school !! I tend to assume certain things...

No problem!!

You don't need to care when I am

here!

But..who are you, o' God of the Godless??

But..who are you, o' God of the Godless??

Aah...come on!! Nothin' like that., I'm Mr. Hotshot from the Teddy

Mac group.

Hey, Boss!I've managed to get a record number of people on loan

list.

Risk

Retu

rn

This is going to be the most enticing philosophy of the century!

The tenet of marrying shrewd investment decisions peppered with lil' philanthropy and dreams of a home for

the making and voila!! You get an unforgettable combo!!

Oh,yeah!! Finally my strategy

seems to be paying off..

Risk

Retu

rn

You stay here, while I cook up

another package..

Look, how I mint more money using these

loans....OH MY GAWD, my intelligence and business

sense doesn't seem to know any boundaries!!

Here it is!!A pocketful of sunshine!!

Loan securities wrapped in a bundle of joy for the investors!

Securities to cuddle up with, which exude a warmth of knowing that your money is growing itself..

but, at the end of the day, they

are risky...

Oh Come On!! Shakespeare is passé ..There's a lot in a name.. we'll call it.. the

Alpha Grade Structured Credit Enhanced Growth Fund!!Can anyone refute the weight this name carries??

No...not at all, but, are u sure

they aren't risky??....umm.

.lending to these people

who don't deserve

it..what if they don't pay??

Hail you boss!! Hail

you !!Boss!!

Foreclosure my boy ... Foreclosure .. The property they own, would obviously

become an asset few years down the line. Even if the chap fails to pay, we get the property, whose value has to increase!

The greatest plight a genius has to suffer is to explain himself and his vision to these non-

Wharton grads!!

Hey boss!! The people

are not paying their

debts..

Hey boss!! The people

are not paying their

debts..

Seize the property .. why

disturb me??

Everyone’s selling!!! Property rates are falling like Nine Pins!

OH MY GOODNESS...FILE FOR BANKRUPTCY.....WE ARE DOOMED....WE

NEED A BAILOUT...WE WERRE DOING GOOD...MUMMMEEEEE

Everyone’s selling!!! Property rates are falling like Nine Pins!

Hot Shot

Hotter ShotHottest Shot