4. Oil Crisis in 1973
The oil Crisis started in between
1973-1974 oil crisis which was led by
Arab members of the Organization of
Petroleum Exporting Countries (OPEC).
5. Some fact of Oil Crisis
• The crisis also prompted a call for individuals and businesses to conserve
energy, most notably a campaign by the Advertising Council using the tag line "Don't Be
• The 1973 oil crisis was a major factor in Japan's economy shifting from oil-intensive
industries, and resulted in huge Japanese investments in industries such as
• The UK, Germany, Italy, Switzerland, and Norway banned flying, driving and boating on
Sundays. The Netherlands imposed prison sentences for those who used more than
their given ration of electricity.
• To help reduce consumption, in 1974 a national maximum speed limit of 55 mph (about
88 km/h) was imposed through the Emergency Highway Energy Conservation Act.
36. Great Recession 2008
National Bureau Of Economic
Research (NBER) is the official
agency in charge of declaring that
the economy is in the state of
Recession is significant decline in
economic activity lasting more
than few months, which is
normally visible in real GDP, real
income, employment, industrial
production, & wholesale-retail
37. Interest Rates
The Fed injected additional reserves and kept interest
rates at 2% or less throughout 2002-2004.
38. House Price Change
Housing prices were relatively stable during the 1990s, but they
began to rise toward the end of the decade.
From the summer of 2006 home prices started declining.
39. Bubble that burst…
• In the US nearly 10.8% of total homeowners –
had zero or negative equity as of March 2008
• However, as the home prices were falling
rapidly, the lending companies found them in a
situation where loan amount exceeded the total
cost of the house. Eventually, there remained no
option but to write off losses on these loans.
• During 2007, nearly 1.3 million U.S. housing
properties were subject to foreclosure activity.
• Sales volume (units) of new homes dropped by
26.4% in 2007 as compare to 2006.
42. Sep. 14 Lehman Brothers 4th largest investment bank
Bank of America agreed to purchase Merrill Lynch
AIG took $82.9 billion to tide over the crisis.
43. • The lender racked up almost $900 million in losses as
home prices tumbled and foreclosures climbed to a record
• Indy Mac shares lost 87 percent of their value in 2007 and another
95 percent in 2008
44. U.S. housing policies are the root cause of the current financial crisis.
Other players-- “greedy” investment bankers; foolish investors;
imprudent bankers; incompetent rating agencies; irresponsible
housing speculators; short sighted homeowners; and predatory
mortgage brokers, lenders, and borrowers--all played a part.
- Peter J. Wallison
(lawyer & White House counsel)
Hinweis der Redaktion
Source – A German poster from 1923. The text means ‘Hands of the Ruhr!’