Globalisation lecture

Globalisation
Credit crunch, first time after great depression
Banks are lending money 5times more than people's income.
Since the house prices are decreased, people have to sell their houses to the lower prices than they used to.

*Lecture notes:
sub-prime mortgages => credit/$ <= Bank => CDOs/$ <= asset-backed securities sold globally -Mortgages defaults increase -Flow of money stops -Banks concerns over asset-backed securities interbank lending stops *Global effect : usa (CDOs) => uk(CDOs) => europe (CDOs) => china(CDOs) =>india (CDOs)financial markets are global effects
If something happens in one country it will be spread to entirely different country because of the global markets.

Liquidity crises => not enough money for us and also for businesses and because of the liquidity crises everyone started to suffer. businesses go to bankruptcy , they cannot expand, people lose their jobs, living costs are getting higher etc.banks in turmoilin UK, northern rock and in USA, bear stearns are collapsedstock market roller coaster ( failing month by month)

Philosophy of globalisation-liberalization : whatever you do is OK as long as you re making money liberalization: trade, finance, production-all the laws specified for globalization, trade agreements etc. everything is free up the movement of goods and services they removed the rules and regulations but it had side effects of course like air pollution , cheap labour.

Free trade becomes rid of restrictions and brings no obligationsnot for everyone though, somebody had to payonly big multinational companies like coca cola , Gap , Zara can use the advantages