Hou$ing Bubble - 2004

AKA:
$ub prime mortgages - 2008
U$ Recession - 2008
ICICI Bankruptcy Rumor - 2008
$atyam $CAm Expose - 2008

Presenters:
Murali, Bhargavi , $hivam , Chandana , $ainath

Housing loan Process ?

A Housing broker who
works for a
commission
Interest +
principal = EMI

Housing loan was available @ 9 % p.a In US

(2004)

Purpose of Investment banks :

An Investment bank always pays a better return on

the investments Compared to Normal Commercial
banks

Twist in tale:Sub prime

9
%

Pensio
n
Funds

Family

Bhargav
i
Home
Prime
Family

Normal Bank deposit rate = 1

%

Chandana
BANK

Mortgag
e Papers

5
%

Sainath
PressurInvestment Bank
e

Sovereig
n Funds

SHIVA
MAMC.
Mutual
Fund

Pressure

Consol Debt
Papers =
AAA+
AIG

Other
Invest.
banks

Murali
Hedge
Fund

Foreclosure Rate
By the third quarter of 2008, housing prices were approximately 25 percent below
their 2006 peak.

1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%

Whats Next ?

Banks stopped dealing with themselves.

Manufacturing units where shutdown because of lack of credit flow in

the market

Companies like GE Motors, IBM, AIG,

VOLKSWAGEN,FORD,NOKIA,NESTLE Where at the edge of bankruptcy

Stock Market Returns

This collapse eroded the wealth and endangered the retirement savings of
many Americans.

60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%

Some Fast Facts:

Housing prices were relatively stable during the 1990s, but they began to rise toward
the end of the decade.

Between January 2002 and mid-year 2006, housing prices increased by a whopping 87
percent.

The boom had turned to a bust, and the housing price declines continued throughout
2007 and 2008.

By the third quarter of 2008, housing prices were approximately 25 percent below their
2006 peak
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%

How India Impacted ?

Ge Motors Accounted 60% revenue of

Satyam Computer Services ,its biggest

Client ,Which Made Ramalinga Raju
to accept his Fraud.

How India Impacted ?

Nearly 1 Million People Lost their Jobs from all, the sectors ( IT
,ITES,MINING,

MANUFACTURING,AUTOMOBILE)

Icici bank invested 1000cr in Morgan Stanley, which created panic In

customers/investors that icici bank will go into bankruptcy

Exports gone down substantially which hit IT Companies badly

Indian Housing Sector crashed 20-25 % ,Share of Unitech (a Real estate

company) fell from its peak 540/- (2008) to 5.40(2015)

What RR Has to Say ?

Rocking Rajan has predicted this crisis in 2005
He still feels the economy has Hidden Fractures which
Still Threaten the Global Economy ( and hes right)

Does Now
Everything Ok ?
No
Three things which will going to happen as per our
team :
* Collapse of US dollar ($ index moving in line with
equity )
* Collapse of Stock markets (which already started)
* Big Spike in gold price (Which will start in Q1 of
2016)
or
in Simple
Collapse of Global monetary system 2015
Which we may see in GMCS-2