Kevin 2/16/2008

Time: Sat. 2/16, 2pm
Location: UTC 3.102 (Changes will be posted on the door)
Speaker: Kevin Lee (AMD)
Topic: U.S. Economy and Housing Market

Presentation summary: The U.S. economy is losing its momentum because of the financial crisis associated with deteriorations in the housing market and sub-prime mortgage loans. From 2000 to 2006, the U.S housing market delivered huge returns on the investment. In some regions like California and Florida, home prices had doubled or even tripled in this time period. In this presentation, I will talk about the major factors that caused home values to skyrocket. In addition, I plan to show some mathematical formulas to explain why the mortgage banks make more profits by originating sub-prime mortgage loans. These risky loans were ultimately sold to individual investors by the Wall Street investment banks. Because many sub-prime mortgage loans are in default now, investors are no longer interested in buying mortgage notes. As a result, many financial companies are experiencing monetary liquidity problems; lenders are not able to convert their mortgage notes into cash for making new loans. When money supply is tight, banks will make fewer loans to business and consumers. This is a negative factor that is causing the U.S. economy slow down.