Summary
Summary Citigroup Case Analysis of the 2008 Financial Crisis
- Course
- Institution
Its an analysis of the 2008 financial crisis, looking at Citigroup in a case example.
[Show more]
Seller
Follow
princeyork
Content preview
Citigroup Case Analysis of the 2008 Financial Crisis Low interest rates resulting in excessive liquidity
Saving imbalances between the West and Asia due to currency manipulation and corporate
theft of data, as well patent/IP fraud.
Risky borrowing/Sub-prime loans/De-regulatory philosophy
Gatekeeper (credit agency) conflicts of interest
U.S. policymakers, businesses, and labor groups argue that Chinese currency is
undervalued by as much as 40 percent against the dollar, making Chinese exports
cheaper, putting massive dollar flows in the hands of the Chinese.
Undervaluation is also because of the yuan has expanding the U.S. trade deficit with
China, hurting U.S. manufacturers and depressing U.S. employment, which continues to
hover above 9 percent. As evidence that the yuan is "significantly undervalued" (PDF),
the U.S.-funded nonpartisan Congressional Research Service cited the sharp increase in
China's foreign exchange reserves from $403 billion to $1.5 trillion between 2003 and 2007
(lol), and China's large trade surplus totaling $268 billion in 2007.
In 2010, the country's foreign exchange reserves had climbed to around $3.2 trillion, and
its trade surplus had narrowed to $183.1 billion.
U.S. financial regulatory failures ultimately forced trade surpluses on China. --Albert
Keidel
The main indicator that the yuan is undervalued is that China continues to accumulate
large foreign exchange reserves. That, Dadush says, is "indicative of China's intervention
in the market to keep the yuan from rising."
The lax U.S. financial regulations that fueled highly leveraged over-borrowing and
overconsumption of Chinese exports. "U.S. financial regulatory failures ultimately forced
trade surpluses on China," says Keidel. Governments build foreign exchange reserves to
fend off speculation against their currencies as they liberalize their financial markets, he
says.
The CDO issue / sCam Debt Obligations (2) suCk Dick for repaymentO
Particular specific interests involved in this case (166-167)
Clinton Admin Robert Rubin, Charles Prince, whatever other similarly minded individuals, their
consciousness types
The article goes over basic solutions. Adjustments to regulating business processes (4-5), capital
requirements (5), Compensation regulation (6), More risk liability (7), and who gets to decide
selection of management (7). Interesting solutions presented, but think of alternatives as well.
--> The question is how should the west adjust these factors of the economy while retaining
competitive western economic qualities and increasing profitability and economic wealth/gains
It's argued that "fear of firing can discourage excessive risk taking if its perceived losses will be
held against executives" as well "fear of firing can encourage excessive risk taking is executives
perceive appointment controllers are more concerned about earnings than risk"
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller princeyork. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.48. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
52355 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now