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.

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?

Central banking

Central banking functionsListening: Reader, p 29

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 operations2) Exchange rate supervision3) Commercial banking supervision4) Act as a lender of last resorthttp://www.youtube.com/watch?

v=3u2qRXb4xCU

The Federal Reserve

Ben Bernanke

Chairman of the Federal Reserve

Glenn Hubbard

Dean of Columbia Business School

Pair up!

• Treasury Slavko Linić

• Bank of England Ministar financija

• Chancellor Ministarstvo financija

• The Governer Hrvatska narodna banka

• Georg Osborne Guverner HNB

• _________ Željko Rohatinski

Pair up!

• Treasury Slavko Linić

• Bank of England Ministar financija

• Chancellor Ministarstvo financija

• The Governer Hrvatska narodna banka

• George Osborne Guverner HNB

• Mervyn King Željko Rohatinski

Pair up!

• Treasury Ministarstvo financija

• Bank of England Hrvatska narodna banka

• Chancellor Ministar financija

• The Governer Guverner

• George Osborne Slavko Linić

• Mervyn King Željko Rohatinski

• 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)

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

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

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

___________ - 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

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

• __________ -the department of government

that has control over the collection,

management, and disbursement of the public

revenue.

• ____________ -the British cabinet minister

responsible for finance 

• 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 

HW: Northern Rock, RB, p 28Task 1

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

7 run on a bank

8 come under pressure

9 (borrow) over their heads

10 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

HW: Task 2 http://www.youtube.com/watch?v=3u2qRXb4xCU

Watch CBS students’ video and write down expressions used to describe:

- what Fed Chair does

- effects on the econmy

→ 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.