HW: Watch the Crisis of credit video and answer the questions

1. HW: Watch the Crisis of credit video and answer the questions Following the tech bubble and the events of September 11, the Federal Reserve stimulated a struggling economy …HOW? ... by ________________________________________ WHAT WAS THE RESULT ON THE HOUSING MARKET? _____________________________________________ WHAT WAS THE CONSEQUENCE FOR BORROWERS? ______________________________________________ This left mortgage lenders with property that was worth … HOW MUCH?______________________________________ WHAT HAPPENED TO SEVERAL LENDERS ______________________________________________ In the wake of the meltdown, …WHAT DID CENTRAL BANKS DO?

2. Central banking

3. Central banking functionsListening:Reader, p 29

4. 1a Listening The functions of a central bank: 1) Implementing monetary policy • 1a) setting interest rate ceilings and floors • 1b) printing money or destroying it • 1c) open-market operations 2) Exchange rate supervision 3) Commercial banking supervision 4) Act as a lender of last resort http://www.youtube.com/watch?v=3u2qRXb4xCU

5. The Federal Reserve Glenn Hubbard Dean of Columbia Business School Ben Bernanke Chairman of the Federal Reserve

6. Pair up! • Treasury Slavko Linić • Bank of England Ministar financija • Chancellor Ministarstvo financija • The Governer Hrvatska narodna banka • Georg Osborne Guverner HNB • _________ Željko Rohatinski

7. Pair up! • Treasury Slavko Linić • Bank of EnglandMinistar financija • ChancellorMinistarstvo financija • The Governer Hrvatska narodna banka • George Osborne Guverner HNB • Mervyn KingŽeljko Rohatinski

8. Pair up! • TreasuryMinistarstvo financija • Bank of England Hrvatska narodna banka • ChancellorMinistar financija • The Governer Guverner • George Osborne Slavko Linić • Mervyn KingŽeljko Rohatinski

9. Ministarstvo financija (Ministar) • US Department of the Treasury (Treasury Secretary) • Treasury (UK) (Chancellor) • Hrvatska narodna banka (Guverner) • The Federal Reserve (Chairman) • Bank of England (Governer)

10. Northern Rock Banking Crises, RB, p 28 • Read the introduction – underline unknown words • Match questions to corresponding paragraphs • Underline words that appear in The Crisis of Credit or Subprime Meltdown • Underline unknown words • Work in pairs to narrow down your choice of words/expressions you want explained down to 5

11. Which term is explained here? _________ - the concerted action of depositors who try to withdraw their money from a bank because they think it will fail _________ - debt not protected by an agreement that the company borrowing the money has to bive the lender some assets if unable to repay the loan _________ - at a low cost

12. Which term is explained here? Bank run / run on a bank - the concerted action of depositors who try to withdraw their money from a bank because they think it will fail Unsecured - debt not protected by an agreement that the company borrowing the money has to give the lender some assets if unable to repay the loan On the cheap - at a low cost

13. ___________ - a restraint or limitation of credit; restricted bank lending that is accompanied by rising short-term interest rates and a decline in economic growth ___________ - debt that will only be repaid only after all other debts have been paid __________ - providing money to a person or an organisation to get them out of financial trouble _________ - notice that something is going wrong

14. Credit squezze - a restraint or limitation of credit; restricted bank lending that is accompanied by rising short-term interest rates and a decline in economic growth Subordinated - debt that will only be repaid only after all other debts have been paid Bailout - providing money to a person or an organisation to get them out of financial trouble Spot trouble - notice that something is going wrong

15. __________ -the department of government that has control over the collection, management, and disbursement of the public revenue. ____________ -the British cabinet minister responsible for finance 

16. The Treasury -the department of government that has control over the collection, management, and disbursement of the public revenue. The Chancellor -the British cabinet minister responsible for finance

17. 1 unsecured debt 2 bailout 3 on the cheap 4 to stem 5 to hamper 6 covered bonds a to stop b to prevent, hinder c issued with a guarantee (an asset) d at a low cost e debt that is not supported by any assets of a borrower f providing money to get sb. out of financial trouble HW: Northern Rock, RB, p 28Task 1

18. run on a bank come under pressure (borrow) over their heads mortgage lender g organization that makes loans for buying property with the property as security h a sudden demand by many people i more than would be reasonable, intelligent j to feel pushed to act

19. HW: Task 2http://www.youtube.com/watch?v=3u2qRXb4xCU Watch CBS students’ video and write down expressions used to describe:

20. → Practise speaking: Role play, p 76 Consider everything you know about holding meetings, banking, microfinance, credit squeeze and central banking. All of it feeds into this roleplay. • get in teams of 5! • (5 roles): pp 145,148,150,152,153 • pick a role for each team member • study your role • ask for help if you have problems understanding • follow the chairperson’s cue and discuss the following proposal: The bank should enter the microfinance market in developing countries.