A seminar presentation at Dong-A University in Busan on the primary causes of the Global Financial Crisis of 2008 and who is responsible for causing the crisis.
ive heard many lectures about 2008 fin crisis but the way you explained is amazing.. Sir you have an amazing style of teaching & explaining.. I recommended your channel to my ACCA friends and they are loving your lectures specially on financial management.. I genuinely respect your hard work.
A very recently launched book "Globalisation, Democratization and Distributive Justice" by Prof Moolchand Sharma, discusses such things.. and this lecture cleared the base required to read that book..
victim of 2008 subprime crisis. i worked for long hours more than 20 hours for rabo bank at cognizant chennai india.,which resulted in bakpain to me for next 10 years and unable to work for 10 years
It is worth adding now that we are passing mid-cycle that in many countries we are heading toward yet another property market asset bubble. Property (that is, land) market cycles have occurred on average every 18-21 years, depending on the policies following by government and the financial sector. The record low mortgage interest rates existing since 2010 have meant property buyers can carry higher levels of mortgage debt, which market forces capitalize into higher and higher property prices (driven by credit-fueled land speculation). The only possible way to forestall or at least mitigate the next decline is to implement actual tax reform: (a) remove the tax advantage given to so-called capital gains over ordinary income; (b) return real progressivity to the individual income tax, the objective being to heavily tax income derived from passive investment and speculation; and (c) local governments need to be encouraged to move to a property tax structure that exempts property improvements in favor of collecting the potential annual rental value of all privately-held locations (a change sometimes referred to as "land value taxation").
Hello Sir, What is your take on real estate market skyrocketing in Vancouver and Toronto in the last 7-8 years? Also what is your take on investing in Electronic car stocks and lithium stocks? Hoping for your answer. Thank you
Great lecture! Just out of curiosity, what action should the US Fed Reserve take at this point in time? Should they raise rates? Are there any smooth solutions to these economic crises?
I think maybe some fisical policies like governmetn investment in some infrastructures. Building consumers' confidence on future's econocmis condition.
Sir, I keep reading and hearing that it would be wise to hold a few oz. of physical gold and/or silver bullion in my/our possession as a way to preserve some of our wealth or as a hedge to protect ourselves from the next economic crisis or financial collapse. May I (we) get your opinion on this. I appreciate your wisdom and insight. Martin in Canada
Professor Petrov's statements regarding lending to minorities in the United States makes it sound as if all prudent underwriting standards were discarded. This is not what occurred, although the financial lending markets experienced a high level of fraud and misrepresentation. What caused this to occur? Investors are always looking for higher and average yields. Some every astute people convinced investors to channel billions of dollars into the purchase of private label mortgage backed securities. The loans produced and pooled together as collateral for these securities were originated by mortgage brokers paid high fees to find borrowers willing to pay high rates of interest and pay high fees. Often the people borrowing the money had no idea of the terms they were agreeing to. Often the people borrowing the money would never have obtained the financing from a lender using prudent underwriting. Investors acquired a false confidence in the quality of the MBS because bond rating agencies rated the MBS equivalent to AAA bonds, without any investigation into how the loans were produced.
Hi Petrov..what is your understanding on Indian economy now? was demonetization and going digital like using paytm etc was a correct move to curb black money?
Of course not. Indian monetization was a complete disaster and made life a lot worse for most ordinary people. Going digital is hopeless in India for the next 1-2 decades at least. How do you go "DIGITAL" when half of the population is illiterate?
20 to 30 years of mismanagement and irresponsible fiscal policies resulted in the Great Recession -- that and failing to learn from the stock market crash of 1929 and the subsequent Great Depression.
What causes a bubble to burst is extremely complicated and difficult to explain in a message. It usually take many hours to explain such a complex topic. Most often it is either tighter monetary policy or a loss of confidence in the bubble.
I do not disagree with Mr. Petrov's comment that the causes of bubbles are complex. That said, there is a fundamental cause of asset bubbles, which is a nation's tax structure that rewards speculation and rent-seeking strategies, generally. A low effective rate of taxation on the value of land (or, more accurately, the potential annual rental value of locations) rewards hoarding of land and land speculation over investment in production of housing and capital goods. This drives up the cost of acquiring or leasing land (passed on thru to real estate generally) the point that asking prices stress individual affordability and business profit margins. The land market is usually the first asset bubble to burst, and a chain reaction follows.
The three primary reasons people cannot repay what is borrowed are: (1) prolonged unemployment; (2) divorce; and (3) prolonged illness. A related cause is the assessment of penalties and compounding of accrued interest once one falls behind.
sorry Sir, the OTC derivatives forex trading are much bigger bubble, interest rate swap a much bigger problem, subprime mortgages securitisation/CDS are tiny.
Krassimir Petrov based on the data I am seeing I do.not see any sign of a recession BUT I do see a Mid cycle slowdown. People will think this is a recession BUT it is not. I am UK based. I still think 2025/2026 Based 400 years of repeating cycles here in the UK
Just take a very careful look at your data in 2007. Did your data point to a Great Recession in 2008 or the data pointed at a booming U.K economy?? What about the booming US economy in 1999?? Quite often a crashing stock market or real estate market will drive the economy in recession, not the other way around.
I feel sick hearing such terrible facts. I wasn't only thinking about ten of millions of people who lost their jobs and home in the US, but those dieases did also spread worldwide. Those scumbags won't even pay for what they'd done. My god.. what a world..
I'm still wondering how such a good lecture turn into insulting the black people. I'm not myself black however, the way this lecturer degraded 13% of the American population is beyond me.
Thought the same thing. Great lecture, but to insist that 13% of the population is responsible for 100% of the problem is crazy. Of the 13% Whats the Numb3rs on defaults? All of them? Come on brother that is laugh worthy.
Greenspan didn't tell lenders to throw out their underwriting procedures/protocols and give a loan to every tom dick and harry that walked through their door after which those loans got packaged in MBSs.
He sure encouraged them with his super-low interest rates which only magnified the expected profits. Yes, it was Greenspan's fault. With interest rates high, none of this would have happened.
Krassimir Petrov why would you have high interest rates when inflation is low? Mortgages need to be controlled through regulations that’s fiscal policy not monetary policy. Dumb dumb.
Because interest rates depend on available savings in the economy. If US savings are low, then interest rates MUST be high. Otherwise problems happen as we saw in 2008.
ive heard many lectures about 2008 fin crisis but the way you explained is amazing.. Sir you have an amazing style of teaching & explaining.. I recommended your channel to my ACCA friends and they are loving your lectures specially on financial management.. I genuinely respect your hard work.
Sound analysis. This is the most concise and comprehensive examination of the problem I've heard.
Thank you. I have worked hard to prepare it.
I agree. I just shared this on my FB page as this is the best explanation I have ever seen.
Its nice to see you back posting videos, welcome back Mr Petrov
+NazzMustapah Tahnk you.
please keep making the videos and share your knowledge, thoughts and understanding. I can spend hours watching your videos.
+Vladislav Sadykov A lot of people that I introduced to Krassimir Petrov's videos become hooked, so our club is growing :)
+Vladislav Sadykov Thank you. More courses are being recorded and on their way.
+Krassimir Petrov Thank you.
An outstanding Profefssor! It is almost impossible not to understand what he is teaching. Big up Professor !!!
Thank you very much.
Great lecture, professor. Thank you for sharing such a great content.
Youre a great lecturer! So glad I found your videos :)
Easy to understand! Love many of your teachings.
Economic investigator Frank G Melbourne Australia 🇦🇺 still watching this very informative content cheers Frank
Best explanation thanks
i am learning about economic and i would say this would be a good class.
Благодаря за лекцията и изобщо за целия канал!
A very recently launched book "Globalisation, Democratization and Distributive Justice" by Prof Moolchand Sharma, discusses such things.. and this lecture cleared the base required to read that book..
Im watching this lecture in 2020. Still relevant!
It's starting to happen now
I have watched this 4 times. Great video.
Thank you.
the best lecture of economics
love very much for teaching
He purports to explain the reasons why, but doesn't get to why the US interest rates were pushed so low.
victim of 2008 subprime crisis. i worked for long hours more than 20 hours for rabo bank at cognizant chennai india.,which resulted in bakpain to me for next 10 years and unable to work for 10 years
Very interesting, you speak very slowly and clearly, was it a challenge teaching in Taiwan in English ?
thanks it's a good lecture and im making my final year project on this topic(CAUSES AND CONSEQUENCES OF US FINANCIAL CRISIS)
Thank You.
best time spent on my life!
Thank You.
Wonderful explanation, thank you very much
Thank You.
Excellent
You are an awesome sir.
Thank You.
economics lectures as they should be
+Ivaylo Pashov Thank you.
It is worth adding now that we are passing mid-cycle that in many countries we are heading toward yet another property market asset bubble. Property (that is, land) market cycles have occurred on average every 18-21 years, depending on the policies following by government and the financial sector. The record low mortgage interest rates existing since 2010 have meant property buyers can carry higher levels of mortgage debt, which market forces capitalize into higher and higher property prices (driven by credit-fueled land speculation). The only possible way to forestall or at least mitigate the next decline is to implement actual tax reform: (a) remove the tax advantage given to so-called capital gains over ordinary income; (b) return real progressivity to the individual income tax, the objective being to heavily tax income derived from passive investment and speculation; and (c) local governments need to be encouraged to move to a property tax structure that exempts property improvements in favor of collecting the potential annual rental value of all privately-held locations (a change sometimes referred to as "land value taxation").
thank you Sir!
+B.pulls You are welcome.
Hello Sir, What is your take on real estate market skyrocketing in Vancouver and Toronto in the last 7-8 years? Also what is your take on investing in Electronic car stocks and lithium stocks? Hoping for your answer. Thank you
Can u give the slides???i really want to see....
Best lecturer ever... I wish I could study at you..but
+Петр Резник Thank you.
WELL EXPLAINED
Thank You.
Great lecture! Just out of curiosity, what action should the US Fed Reserve take at this point in time? Should they raise rates? Are there any smooth solutions to these economic crises?
I think maybe some fisical policies like governmetn investment in some infrastructures. Building consumers' confidence on future's econocmis condition.
There is NOTHING that the Fed can do to fix the problem. They can only extend and pretend -- they call it QE.
do youhave the link for your ppt?
Sir, I keep reading and hearing that it would be wise to hold a few oz. of physical gold and/or silver bullion in my/our possession as a way to preserve some of our wealth or as a hedge to protect ourselves from the next economic crisis or financial collapse. May I (we) get your opinion on this. I appreciate your wisdom and insight. Martin in Canada
Yes, gold outside the financial system is the best way for you to protect your wealth.
you have changed a lot
+lula balcha Yes, my appearance has changed, but I am the same "old" lecturer that you have known for many years.
can you give me the content of the slides please
The whole world was not only buying them, the whole world was also selling them to their own citizens
Professor Petrov's statements regarding lending to minorities in the United States makes it sound as if all prudent underwriting standards were discarded. This is not what occurred, although the financial lending markets experienced a high level of fraud and misrepresentation. What caused this to occur? Investors are always looking for higher and average yields. Some every astute people convinced investors to channel billions of dollars into the purchase of private label mortgage backed securities. The loans produced and pooled together as collateral for these securities were originated by mortgage brokers paid high fees to find borrowers willing to pay high rates of interest and pay high fees. Often the people borrowing the money had no idea of the terms they were agreeing to. Often the people borrowing the money would never have obtained the financing from a lender using prudent underwriting. Investors acquired a false confidence in the quality of the MBS because bond rating agencies rated the MBS equivalent to AAA bonds, without any investigation into how the loans were produced.
Hi Petrov..what is your understanding on Indian economy now? was demonetization and going digital like using paytm etc was a correct move to curb black money?
Of course not. Indian monetization was a complete disaster and made life a lot worse for most ordinary people. Going digital is hopeless in India for the next 1-2 decades at least. How do you go "DIGITAL" when half of the population is illiterate?
20 to 30 years of mismanagement and irresponsible fiscal policies resulted in the Great Recession -- that and failing to learn from the stock market crash of 1929 and the subsequent Great Depression.
Thanks for the nice explanation sir. But if i may ask, what causes economic bubble to burst?
What causes a bubble to burst is extremely complicated and difficult to explain in a message. It usually take many hours to explain such a complex topic. Most often it is either tighter monetary policy or a loss of confidence in the bubble.
I do not disagree with Mr. Petrov's comment that the causes of bubbles are complex. That said, there is a fundamental cause of asset bubbles, which is a nation's tax structure that rewards speculation and rent-seeking strategies, generally. A low effective rate of taxation on the value of land (or, more accurately, the potential annual rental value of locations) rewards hoarding of land and land speculation over investment in production of housing and capital goods. This drives up the cost of acquiring or leasing land (passed on thru to real estate generally) the point that asking prices stress individual affordability and business profit margins. The land market is usually the first asset bubble to burst, and a chain reaction follows.
Your so good sir. Thankyou just one question that i dont understand why the borrowers they cannot/dont afford ... to pay for the money the borrowed ??
The three primary reasons people cannot repay what is borrowed are: (1) prolonged unemployment; (2) divorce; and (3) prolonged illness. A related cause is the assessment of penalties and compounding of accrued interest once one falls behind.
sorry Sir, the OTC derivatives forex trading are much bigger bubble, interest rate swap a much bigger problem, subprime mortgages securitisation/CDS are tiny.
We can't see what you write in board.
To complement this great lecture: Watch the movie "The Big Short".
A good documentary is "Meltdown" (5 parts)
Speculation in land prices is what drives the economy. 18 year cycle.
Now the speculation is in real estate and stocks (and junk bonds)
Based on this then the next recession is 2025/2026 roughly 18 years from the last one
18 year is approximation. The next one could be sooner or later. I would guess much sooner than 2025.
Krassimir Petrov based on the data I am seeing I do.not see any sign of a recession BUT I do see a Mid cycle slowdown. People will think this is a recession BUT it is not. I am UK based. I still think 2025/2026 Based 400 years of repeating cycles here in the UK
Just take a very careful look at your data in 2007. Did your data point to a Great Recession in 2008 or the data pointed at a booming U.K economy?? What about the booming US economy in 1999?? Quite often a crashing stock market or real estate market will drive the economy in recession, not the other way around.
what's your opinions about Chinese real estate market?
Mine is that is a giant bubble ready to explode.
It is a giant bubble. Probably the biggest real estate bubble in the history of humanity.
Krassimir Petrov what are your reasons for this? Thanks & great video
This was in North Korea?
Did you apply economics to your hair cut? Cause sometime I do that if I don't want to see barber gay.
I wonder how much non productive credit there is in the world atm..
so long no see, where is your hair,sir..
+sheve chang It is all gone now. But I am still the same guy that you have known for many years.
I feel sick hearing such terrible facts. I wasn't only thinking about ten of millions of people who lost their jobs and home in the US, but those dieases did also spread worldwide.
Those scumbags won't even pay for what they'd done.
My god.. what a world..
Correct. The system is rigged. It is designed for them to profit, but never to pay for their mistakes -- that's what the taxpayers are for.
I'm still wondering how such a good lecture turn into insulting the black people. I'm not myself black however, the way this lecturer degraded 13% of the American population is beyond me.
Thought the same thing. Great lecture, but to insist that 13% of the population is responsible for 100% of the problem is crazy. Of the 13% Whats the Numb3rs on defaults? All of them? Come on brother that is laugh worthy.
Greenspan didn't tell lenders to throw out their underwriting procedures/protocols and give a loan to every tom dick and harry that walked through their door after which those loans got packaged in MBSs.
He sure encouraged them with his super-low interest rates which only magnified the expected profits. Yes, it was Greenspan's fault. With interest rates high, none of this would have happened.
Krassimir Petrov why would you have high interest rates when inflation is low? Mortgages need to be controlled through regulations that’s fiscal policy not monetary policy. Dumb dumb.
Because interest rates depend on available savings in the economy. If US savings are low, then interest rates MUST be high. Otherwise problems happen as we saw in 2008.
@T S lol There was never crashes in other markets throughout time.
@T S what about tulip mania?
Macau is not a country btw
That's how people usually think about it, even though it is not really an independent country, but part of China.
Boring
Thank you for your comment. I will try better next time.