The economics of money, banking, and financial markets

Global  Ironic Birth of the Eurodollar Market  262

Structure of U.S. Banking Overseas ..................................................................................... 262

Foreign Banks in the United States ..................................................................................... 263

Summary  264   •   Key Terms  265   •   Questions  265   •   Data Analysis Problems  266   •    

Web Exercises  267   •   Web References  267

CHAPTER 12

Financial Crises 

268

What Is a Financial Crisis? .........................................................................................................268

Dynamics of Financial Crises ...................................................................................................269

Stage One: Initial Phase ...................................................................................................... 269

Stage Two: Banking Crisis ................................................................................................... 271

Stage Three: Debt Deflation ................................................................................................ 272

APPLICATION

  The Mother of All Financial Crises: The Great Depression .............273

Stock Market Crash ............................................................................................................ 273

Bank Panics ........................................................................................................................ 273

Continuing Decline in Stock Prices..................................................................................... 274

Debt Deflation .................................................................................................................... 274

International Dimensions ................................................................................................... 275

The Global Financial Crisis of 2007–2009 ............................................................................275

Causes of the 2007–2009 Financial Crisis .......................................................................... 275

FYI  Collateralized Debt Obligations (CDOs)  276

Effects of the 2007–2009 Financial Crisis ........................................................................... 277

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