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The Canadian Dollar Will Crash! - What You Need To Know

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The Canadian Dollar Will Crash! - What You Need To Know

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People are saying the Canadian dollar will crash based on the value dropping in the past. Currently 1 dollar CAD = 75 cents USD and experts say that it will drop to 59 cents USD. Since the global financial crisis, the prices of Canada's commodities have dropped causing our dollar to drop as well.

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The Canadian Dollar Will Crash! - What You Need To Know

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As experts claim the Canadian dollar will hit 59 cents or less, there's no sign it will stop falling. Jeff Berwick (The Dollar Vigilante) says 2016 will be a bloodbath. Legendary author G. Edward Griffin gives the dollar 2 years at the most until its inevitable collapse.

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This article is about a debate whether or not the global financial crisis could happen again. The financial crisis scared businesses and families and that's why we are recovering slower than in other financial crises.

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Could a financial crisis happen again? | Swiss Finance Institute

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Mele explained that financial history is witness to myriads of financial crises but that, at the same time, the current historical context does not seem to be conducive to any imminent crisis. Moreover, the motivation underlying the Vollgeld proposal seems to go well beyond the typical reasons underlying any form of narrow banking.

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A large decline in home prices after the collapse of a housing bubble, leading to mortgage delinquencies and foreclosures.

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Could the Financial Crisis Have Been Avoided?

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Could the Financial Crisis Have Been Avoided?

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This article explains how the financial crisis could have been prevented. One way it could have been prevented was to regulate the mortgage brokers because they were the ones who made bad loans. Another way was to regulate the hedge funds because they used too much leverage

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In 2006, the Fed ignored the second clear sign of economic distress. That was the inverted yield curve for U.S. Treasurys. An inverted yield curve is when short-term Treasury note yields are higher than long-term yields. Regular short-term yields are lower. Investors need a higher return for tying up their money for longer. But they will invest in a long-term bond for protection from a downturn. The yield curve had also inverted before the recess ions of 2000, 1991, and 1981.

Economists ignored this sign because interest rates were lower than in prior recessions. Most of them thought housing prices would rise once the Fed lowered interest rates even more. They believed the economy would still grow 2-3 percent that year. That's because the economy had plenty of liquidity to fuel growth.

Real Cause of Crisis

Second, unregulated mortgage brokers made loans to people who weren't qualified. Third, many homeowners took out interest-only loans to get lower monthly payments. As mortgage rates reset at a higher level, these homeowners could not pay the mortgage. Then housing prices fell and they couldn't sell their homes for a profit. As a result, they defaulted.

Fourth, banks repackaged mortgages into mortgage-backed securities. They hired sophisticated "quant jocks" to create the new securities. The "quants" wrote computer programs that further repackaged these MBS into high-risk and low-risk bundles. The high-risk bundles paid higher interest rates, but were more likely to default. The low-risk bundles paid less. The programs were so complicated that no one understood what was in each package. They had no idea how much of each bundle were subprime mortgages.

When times were good, it didn't matter. Everyone bought the high-risk bundles because they gave a higher return. As the housing market declined, everyone knew that the products were losing value. Since no one understood them, the resale value of these derivatives was unclear.

The Fed Intervenes

In March 2007, the Fed realized that hedge fund housing losses could threaten the economy. Throughout the summer, banks became unwilling to lend to each other. They were afraid that they would receive bad MBS in return. Bankers didn't know how much bad debt they had on their books. No one wanted to admit it. If they did, then their credit rating would be lowered. Then, their stock price would fall, and they would be unable to raise more funds to stay in business. The stock market see-sawed throughout the summer, as market-watchers tried to figure out how bad things were.

By August, credit had become so tight that the Fed loaned banks $75 billion. It wanted to restore liquidity long enough for the banks to write down their losses and get back to the business of lending money. Instead, banks stopped lending to almost everybody.

The downward spiral was underway. As banks cut back on mortgages, housing prices fell further. That made more borrowers to go into default, which increased the bad loans on banks' books. That made the banks lend even less.

Over the next eight months, the Fed lowered interest rates from 5.75 percent to 2.0 percent. It pumped billions of dollars into the banking system to restore liquidity. But nothing could make the banks trust each other again.

An Ounce of Prevention

Two things could have prevented the crisis. The first would have been regulation of mortgage brokers, who made the bad loans, and hedge funds, who used too much leverage. The second would have been recognition early on that it was a credibility problem. The only solution was for the government to buy the bad loans.

But the financial crisis was also caused by financial innovation that outstripped human intellect. The potential impact of new products, like MBS and derivatives, were not understood even by the quant jocks who created them. Regulation could have softened the downturn by reducing some of the leverage. It couldn't have prevented the creation of new financial products. To some extent, fear and greed will always create bubbles. Innovation will always have an impact that isn't apparent until well after the fact.

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Could the Financial Crisis Have Been Avoided?

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In 2006, the Fed ignored the second clear sign of economic distress. That was the inverted yield curve for U.S. Treasurys. An inverted yield curve is when short-term Treasury note yields are higher than long-term yields. Regular short-term yields are lower. Investors need a higher return for tying up their money for longer.

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The global financial crisis and its impact on Canada

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The global financial crisis and its impact on Canada

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Canada was not affected by the global financial crisis as much as industrialized countries like the United States and Great Britain. Canada was ranked number for having the soundest bank system in the world by The World Economic Forum. Although Canada's banking system is so good, it is still being affect by the global economic slowdown. the financial crisis may not have affected us directly but the impact in the United States and other countries has affected us.

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CA-US-The global financial crisis and its impact on Canada/prb0834

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While the Canadian financial system seems to be doing relatively better than those of other countries, Canada's economy is nonetheless feeling the global economic slowdown. The economic difficulties experienced by our largest trading partner - the United States - are resulting in weaker Canadian exports and further problems for the manufacturing sector.

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The Causes and Effects of the 2008 Financial Crisis

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The Causes and Effects of the 2008 Financial Crisis

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The US federal reserve lowered interest rates to 1% to keep the economy strong. This turned off the investors but turned on the banks. They could borrow money for only 1% giving them leverage. Banks, home owners and investors are all connected through mortgages. A family talks to a mortgage broker after putting a down payment on a house. He then connects them to a mortgage lender who gives them a mortgage. Lenders often sell mortgages to investment bankers and the bankers keep them so they can get payments from homeowners every month. When a lot of mortgages under the same banker defaults, no one will want to buy from him and that freezes the whole financial system.

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The Causes and Effects of the Financial Crisis 2008

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This Caused some major Financial companies declared bankruptcy, like Lehman Brothers. Others were forced into mergers or needed to be bailed out by the government.

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The 2008 Financial Crisis: Crash Course Economics

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The 2008 Financial Crisis: Crash Course Economics

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This video is about the global financial crisis happened. The financial crisis happened
because banks were able to create
too much money, too quickly,
and used it to push up house prices
and speculate on financial markets.

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How it Happened - The 2008 Financial Crisis: Crash Course Economics #12

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There was a drastic increase for the TED spread in 2008-2009. This shows the increase in perceived credit risk. The TED spread is  difference between the interest rates on inter bank loans and on short term government debt.

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Welcome to 'The Global Financial Crisis' Webstite

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Welcome to 'The Global Financial Crisis' Webstite

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This padlet wall will help you learn about the financial crisis that peaked in 2008.

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The Global Financial Crisis by Matthew Styles

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The Global Financial Crisis by Matthew Styles