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Macroeconomics
Home Work 4
Tom Guerlain-Weckmann
Too big to fail:
1. “Too big to fail” is about the inside story of how Wall Street save themselves from
the most incredible crisis of the 21 century (2008). This crisis we called the
Subprime crisis. We follow moment by moment how Lehman Brothers face the
worst calamity that ever affects the U.S financial market since the Great
Depression. The main pilot is how the banks, which become multinational since
the Congress allowed that the merchant bank and the trading bank can merge,
will react about this situation.
2. Wall street began by aggregating different types of housing loans, which have
been called backed titles. She sold bundles of these packages to investors. It was a
very profitable operation. So the banks pushed lenders to take back loans. But as
the praetors had already granted loans to creditworthy customers, the banks had
lowered their lending by lowering their criteria. By decreasing their criteria they
allow people, normally insolvent, to grab. This segment of the population is
saying that it has the means to repay its loan that the experts have granted it.
With this loan this tranche finally buys his own house. It is at this moment that
the banks have the idea to ensure the credits of the people at risk like those of
this bracket. In this way if the printer cannot pay his credit, the bank is assured of
receiving compensation from his insurer. They have therefore moved the risk
factor to be able to invest even more and be able to grant even more loans to
even more insolvent people. And as it is said in the film, the banks continued over
and over because of the hundreds of millions of commission they were taking in
passing. On the side of the insurers they all thought that the US real estate market
could only increase. But they were wrong. The bubble ends up bursting. On the
side of the insurers they all thought that the US real estate market could only
increase. But they were wrong. The bubble ends up bursting. The price of real
Even if after see this movie the conclusion is that the institution have a power of
influence more than a power of decision.
