Understanding the banking collapse
by The Open University
This course material is only available in the iTunes U app on iPhone or iPad.
Was London banker Nicola Horlick right to say this? Draw your own conclusions from this learning pathway, which lays out the factors that contributed to the catastrophic collapse of the world’s banks, resulting in a ‘credit crunch’ of global proportions.
No prior knowledge of economics is required to follow this analysis of how the credit boom years freed up wealth as banks boosted profits through a doomed trade in so-called toxic assets.
Understand what securitisation means, and how the failure of the sub-prime mortgage market was instrumental in triggering a domino effect that saw once-mighty institutions fall – from Northern Rock and HSBOS to Bear Stearns and Lehman Brothers.
As the casualty list mounted, what was done to try to put things right? What role did governments and regulatory agencies play, and what could – or should – they be doing now to stabilise the financial sector? An examination of the history of bubble economics – from the South Sea Bubble of the 18th Century to the Dot-com Crash of the 1990’s – suggests boom and bust cycles are inevitable and even have benefits but analysis of disasters past and current stock market research also points to a contributing factor that may prove very resistant to regulation: human emotion.
|1||The collapse||Banks were once the corner stone of modern British society, but by September 2005 banks stopped lending to each other overnight. What happened? What caused this credit crisis?||7:47||Free||View in iTunes|
|2||Casino Banking||As banks were pressured to increase returns, the age of casino banking was born. Along with it came ever more complex forms of securitised debt.||3:44||Free||View in iTunes|
|3||More lending, more spending||By the end of 2004 people were offered more money and a larger choice in financial products. Ken Jones explains how cheap credit helped his business go from strength to strength.||4:04||Free||View in iTunes|
|4||Rating Agencies: too lenient?||Were the rating agencies too lenient? Should these private companies have seen the crisis coming?||2:11||Free||View in iTunes|
|5||The first domino: Northern Rock||In early 2007 Northern Rock were the first of the UK retail banks to seek emergency funding from the Bank of England.||5:00||Free||View in iTunes|
|6||Nationalising the banks||Twelve months after the fall of Northern Rock the UK Government intervene with fresh capital for an otherwise failed banking system. Never the less the country plunged head on into a recession.||4:07||Free||View in iTunes|
|7||The future of banking||What does the future hold for the retail banking system? Will we be forced to revert back to more a traditional, low profit approach to lending?||3:38||Free||View in iTunes|
||The banking collapse in context||The Open University’s Martin Upton, Jonquil Lowe and Alan Shipman look back and reflect on the global effects of the banking crisis of 2008-09.||10:09||Free||View in iTunes|
|9||What are economic bubbles?||Bubbles are when a products value continues to rise beyond its true value. But what happens when the bubble inevitably bursts?||3:05||Free||View in iTunes|
|10||Types of economic bubbles||Intrinsic bubbles, informational bubbles, classic bubbles and fads are all the results of over valued products.||3:51||Free||View in iTunes|
|11||The dot.com boom||Tom Hadfield was only 12 years old when he set up the internet sensation Soccernet, by the time he was 17 years old he sold the company to ESPN for $40million dollars.||4:30||Free||View in iTunes|
|12||Does the media fuel bubbles?||The dot.com bubble wasn't just confined to the investment and trading community, the public also got involved, and this caused a media frenzy.||2:28||Free||View in iTunes|
|13||How was the dot.com market valued?||The dot.com's equity was valued on visits and clicks. There was nothing to research, traditional valuing techniques went out the window.||2:07||Free||View in iTunes|
|14||The dot.com crash||Once the dot.com market started to crack, investors soon realised that these internet companies weren't really worth anything at all, but was this enough for them sell up before the bubble burst?||3:14||Free||View in iTunes|
|15||Dot.com and the public damage||When a bubbles bursts the immediate effect is damage to the public. But is there any longer lasting positive effect on the economy?||3:50||Free||View in iTunes|
|16||The bubbles of today||Is green technology the beginning of a new bubble? Can we spot a bubble emerging? Is there anything that can be done when a bubble does emerge?||3:32||Free||View in iTunes|
||Bubbles in context||The Open University’s Martin Upton, Jonquil Lowe and Alan Shipman take a wider look at whether the rapidly increasing recovery of the world economic market is a bubble itself.||11:23||Free||View in iTunes|
||Money and Emotions||--||--||Free||View in iTunes|