scholarly journals Subprime mortgage crisis in the United States in 2007–2008: causes and consequences (part II)

Ekonomika ◽  
2015 ◽  
Vol 94 (1) ◽  
pp. 7-41 ◽  
Author(s):  
Vaidotas Pajarskas ◽  
Aldona Jočienė
Keyword(s):  
United States ◽  
Federal Reserve ◽  
Quantitative Research ◽  
The United States ◽  
Mortgage Market ◽  
Subprime Mortgage ◽  
Mortgage Crisis ◽  
Subprime Mortgage Crisis ◽  
The Government ◽  
The Impact

This is the second part of the qualitative and quantitative research on the subprime mortgage crisis in the United States in 2007–2008. The main purpose of this research is to determine the factors and how they contributed to the subprime mortgage crisis, what their causal links and effects on the markets and the whole economy were, and to assess what actions could have been taken by the Federal Reserve and the Government in order to mitigate or prevent the consequences of the subprime mortgage crisis and the housing bubble. In order to obtain the results, the authors performed a qualitative analysis of the scientific literature on the course of events and their development that led to the subprime mortgage crisis and focused on insufficiently regulated home mortgage market expansion, the impact on subprime mortgage crisis of financial innovations and financial engineering, poorly evaluated systemic risks and policy undertaken by both the U.S. Government and the Federal Reserve before and after the crisis. The quantitative research focused on two main parts: firstly, the analysis of dependencies between the causes of subprime mortgage crisis and the consequences using the statistical and regression analysis; secondly, an alternative path the Government and the Federal Reserve could have taken in their policy actions, and the results they could have produced have been explored. The authors believe that the results of the research could give useful guidelines to the central bankers and government officials on how to make long-term decisions that can help in preparing for the financial distress, mitigating the consequences when the crisis strikes, accelerating the recovery and even preventing the crisis in the future.

scholarly journals SUBPRIME MORTGAGE CRISIS IN THE UNITED STATES IN 2007–2008: CAUSES AND CONSEQUENCES (PART I)

Ekonomika ◽  
2015 ◽  
Vol 93 (4) ◽  
pp. 85-118 ◽  
Author(s):  
Vaidotas Pajarskas ◽  
Aldona Jočienė
Keyword(s):  
United States ◽  
Federal Reserve ◽  
The United States ◽  
Mortgage Market ◽  
Subprime Mortgage ◽  
Market Expansion ◽  
Mortgage Crisis ◽  
Subprime Mortgage Crisis ◽  
The Government ◽  
The Impact

The main purpose of this article is to determine which factors and how contributed to the subprime mortgage crisis in the United States in 2007–2008, what their causal links and effects on the markets and the whole economy were, and to assess what actions could have been taken by the Federal Reserve and the Government in order to mitigate or prevent the consequences of subprime mortgage crisis and housing bubble. In order to obtain the research results, the authors performed a qualitative analysis of the scientific literature on the course of events and their development that led to the subprime mortgage crisis, and focused on the insufficiently regulated home mortgage market expansion, the impact on the subprime mortgage crisis of financial innovations and financial engineering, poorly evaluated systemic risks and policy undertaken by both the U.S. Government and the Federal Reserve before and after the crisis. The quantitative research focused on two main parts: firstly, analysis of the dependence between the causes of subprime mortgage crisis and the consequences, using a statistical and regression analysis, and secondly, an alternative path the Government and the Federal Reserve could have taken in their policy actions and the results they could have produced. The authors believe that the results of the research could give useful guidelines to the central bankers and government officials on how to make long-term decisions that can help in preparing for the financial distress, mitigating the consequences when the crisis strikes, accelerating the recovery and even preventing the crisis it in the future. The second part of the qualitative research will appear in the next issue of the journal.

BORROWING CAPACITY, FINANCIAL INSTABILITY, AND CONTAGION

2019 ◽  
Vol 22 (01) ◽  
pp. 1850060
Author(s):  
YOUNGNA CHOI
Keyword(s):  
United States ◽  
The United States ◽  
Financial Instability ◽  
Subprime Mortgage ◽  
Capacity Limitations ◽  
Flow Of Funds ◽  
Mortgage Crisis ◽  
Subprime Mortgage Crisis ◽  
Economic Constraints ◽  
The Impact

We use the case of the 2007 United States subprime mortgage crisis to investigate the impact of borrowing capacity limitations on financial instability and contagion. We divide an economy into agents that interact via flow of funds and express the financial instability level of each agent as a function of time derivatives of its wealth, cash inflows, and borrowing capacity. We show that among these factors, the borrowing capacity, which is determined by other economic constraints, has the largest impact on financial instability. It is suggested that borrowing capacity limitations could even cause contagion through feedback loop formed by flow of funds. We use historical time series of the integrated macroeconomic accounts of the United Stated from 1960 to 2017 to verify our conjecture by quantifying the financial instability levels of the agents under different levels of borrowing capacity and how they affect one another during the period of the subprime mortgage crisis. Finally, the constraints of data collecting practice outside the United States in assessing borrowing capacity is addressed, accompanied by partial, yet compatible, results of selected Eurozone countries.

scholarly journals A Masterpiece from the Subprime Mortgage Crisis in America

2020 ◽  
Vol 8 (06) ◽  
pp. 1420-1426
Author(s):  
Muhammad Andri Radiany ◽  
Ali Farhan ◽  
Roy Sumaryono ◽  
Wulandari Harjanti
Keyword(s):  
United States ◽  
Interest Rates ◽  
The United States ◽  
Economic Conditions ◽  
Subprime Mortgage ◽  
Systemic Risks ◽  
Mortgage Crisis ◽  
Before And After ◽  
Subprime Mortgage Crisis ◽  
Descriptive Statistical Analysis

Subprime mortgage crisis is a phenomenon that has a major impact on the world economy. The crisis that began in the United States has infected many other economically related countries with the United States. This study tries to parse how the economic conditions of the United States in the era before and after the crisis. From the results of the descriptive statistical analysis test on the economic conditions of the United States in the period 1998 - 2017, it was found that in the variables of inflation, investment, GDP, and interest rates there were negative differences between before and after the crisis, even though statistically did not show a significant effect, except for interest rate variable. This phenomenon shows that monetary policy oriented to controlling interest has the potential to trigger systemic risks to the economy.

scholarly journals International Real Estate Review

2019 ◽  
Vol 22 (1) ◽  
pp. 27-58
Author(s):  
I-Chun Tsai ◽  
◽  
Che-Chun Lin ◽  
Keyword(s):  
United States ◽  
Financial Markets ◽  
Housing Market ◽  
West Coast ◽  
Housing Markets ◽  
The United States ◽  
Subprime Mortgage ◽  
Mortgage Crisis ◽  
Subprime Mortgage Crisis ◽  
Default Risks

This paper uses the house price indices of 20 metropolitan statistical areas (MSAs) across the United States from January 1991 to April 2018 to analyze the dynamic connectedness of the housing markets in these MSAs. By estimating the connectedness of the entire sample before, during, and after the subprime mortgage crisis, this paper compares the changes in the impact of each regional housing market in the abovementioned MSAs during the stated time period. The results show that housing markets in west coast MSAs are the most influential, and the spatial distribution of this influence is affected by the subprime mortgage crisis because, compared to other periods, the fewest MSAs have a positive net impact during the crisis period and are found along the coast. The influence of the west coast cities increases after the subprime mortgage crisis compared to that before the crisis, probably because the house prices in these cities recover more quickly. In addition, an increase in connectedness represents more systematic risks and also influences the connectedness of the housing markets with other financial markets. The results of this paper also indicate that if the Federal Reserve uses monetary policies to interfere with the housing market, this might increase the default risks of the entire housing market across the United States, and a financial crisis from the spread of default risks might ensue. By discussing the linkage of the regional housing markets across the United States, we provide another warning indicator for the risks of housing markets, risks linked to other financial markets, and uncertainty risks for the overall economy.

scholarly journals CONTAGION AND DOWNSIDE RISK IN THE REIT MARKET DURING THE SUBPRIME MORTGAGE CRISIS

2015 ◽  
Vol 19 (1) ◽  
pp. 42-57 ◽  
Author(s):  
Ming-Chi CHEN ◽  
Hsiu-Jung TSAI ◽  
Tien-Foo SING ◽  
Chih-Yuan YANG
Keyword(s):  
Stock Returns ◽  
The United States ◽  
The European Union ◽  
Subprime Mortgage ◽  
Crisis Period ◽  
Contagion Effects ◽  
Mortgage Crisis ◽  
Systematic Risks ◽  
Subprime Mortgage Crisis ◽  
Capm Beta

This study empirically tests the contagion effects in stock and real estate investment trust (REIT) markets during the subprime mortgage crisis by using daily stock- and REIT-markets data from the following countries and international bodies: the United States, the European Union, Japan, Hong Kong, Singapore, Australia, and the global REIT market. We found a significant and positive dynamic conditional correlation (DCC) coefficient between stock returns and REIT returns. The results revealed that the REIT markets responded early to market shocks and that the variances were higher in the post-crisis period than in the pre-crisis period. Evidence supporting the contagion effects includes increases in the means of the DCC coefficients during the post-crisis period. The Japanese and Australian REIT markets possess the lowest time-varying downside systematic risks. We also demonstrated that the “DCC E-beta” captures more significant downside linkages between market portfolios and expected REIT returns than does the standard CAPM beta.

The Impact of the Nicaragua Case on Matters of Evidence and Fact-Finding

2012 ◽  
Vol 25 (1) ◽  
pp. 149-156
Author(s):  
PAUL S. REICHLER
Keyword(s):  
United States ◽  
Armed Conflict ◽  
The United States ◽  
Pulp Mills ◽  
Government Officials ◽  
The Government ◽  
Fact Finding ◽  
Day To Day Operations ◽  
High Level ◽  
The Impact

AbstractThe Nicaragua case demonstrates the Court's competence in receiving and interpreting evidence, and in making reasoned findings of fact, even in the most complicated evidentiary context, as is often presented in cases involving use of force and armed conflict. The Court applied well-established standards for evaluating the conflicting evidence presented to it. In particular, the Court determined that greater weight should be given to statements against interest made by high-level government officials than to a state's self-serving declarations. The Court also determined that statements by disinterested witnesses with first-hand knowledge should receive greater weight than mere statements of opinion or press reports. In applying these guidelines, the Court found, correctly, that (i) the United States had used military and paramilitary force against Nicaragua both directly and indirectly, by organizing, financing, arming, and training the Contra guerrillas to attack Nicaragua; (ii) the evidence did not support a finding that the United States exercised direct control over the Contras’ day-to-day operations; and (iii) there was no evidence that Nicaragua supplied arms to guerrillas fighting against the government of El Salvador during the relevant period, or carried out an armed attack against that state. While Judge Schwebel's dissent criticized the last of these findings, in fact, the evidence fully supported the Court's conclusion. In subsequent decisions during the past 25 years, the Court has continued to rely on the approach to evidence first elaborated in the Nicaragua case and has continued to demonstrate its competence as a finder of fact, including in cases involving armed conflict (Bosnia Genocide) and complex scientific and technical issues (Pulp Mills).

scholarly journals Warlords, the United States, and the state of anarchy in Afghanistan

2021 ◽  
Vol 6 (2) ◽  
Author(s):  
Ahmad Shah Azami
Keyword(s):  
United States ◽  
The United States ◽  
State Building ◽  
The State ◽  
Negative Consequences ◽  
Human Rights Abuses ◽  
Illegal Mining ◽  
The Us ◽  
The Government ◽  
The Impact

As part of its “War on Terror”, the United States (US) provided immense sums of money and advanced equipment to Afghan warlords in order to defeat and dismantle the Taliban and al-Qaeda in Afghanistan. Nearly two decades after the 2001 US-led intervention in Afghanistan that toppled the Taliban regime, the US continues supporting the warlords in various ways. As the intervention was also aimed at establishing a functioning state and reconstruction of the war-torn country, the US needed the support of local warlords to achieve its goals. However, over time, warlords and warlordism became a major challenge to the postTaliban state-building project and in many ways undermined the overall security and the state monopoly on violence. These warlords, who had been mostly expelled and defeated by the Taliban regime, returned under the aegis of the B52 bombers, recaptured parts of the country and reestablished their fiefdoms with US support and resources. They not only resist giving up the power and prestige they have accumulated over the past few years, but also hamper the effort to improve governance and enact necessary reforms in the country. In addition, many of them run their private militias and have been accused of serious human rights abuses as well as drug trafficking, arms smuggling, illegal mining and extortion in the areas under their control or influence. In many ways, they challenge the government authority and have become a major hurdle to the country’s emerging from lawlessness and anarchy. This paper explores the emergence and reemergence of warlords in Afghanistan as well as the evolution of chaos and anarchy in the country, especially after the US-led intervention of late 2001. It also analyzes the impact of the post-9/11 US support to Afghan warlords and its negative consequences for the overall stability and the US-led state-building process in Afghanistan.

The Impeccable System

Money ◽  
2017 ◽  
Author(s):  
John Kenneth Galbraith ◽  
James K. Galbraith
Keyword(s):  
United States ◽  
Federal Reserve ◽  
The United States ◽  
Central Banks ◽  
Bank Failures ◽  
Federal Reserve System ◽  
Woodrow Wilson ◽  
System P ◽  
The Impact ◽  
Reserve System

This chapter examines the impact of the Federal Reserve System on money and banking in the United States. The Federal Reserve System was created in 1913 by virtue of the Federal Reserve Act passed by Congress and signed by President Woodrow Wilson. The Federal Reserve Act (1913) provided not for one but for as many as twelve central banks. It was conceived as an answer to the great panics, but in this respect the System was notably defective. Nor was the System better as an antidote for an alarming epidemic of bank failures. Furthermore, the most severe inflation ever in peacetime occurred under its watch. The chapter considers the successes and failures of the Federal Reserve System and looks at another body established to study the management of money in the United States: the National Monetary Commission.

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