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SUBPRIME MORTGAGE CRISIS

PROCESS
JOURNAL/WORK LOG
DAY 1
3.05.18

Goal: Research on What is it about/main causes of the subprime mortgage crisis.

What I’ve learned: The crisis began because people did over spend money mostly in

Realestate by mortgage loans from the bank which - at that time, the law on the

commercial banking business was not vigilant enough about subprime- easily gave loans to

customer without considering the risks of their profile. Thus, after they can easily loan

money, people started to buy and sell lands continuously which overprice its actual

value. Once the price was high enough, people couldn’t sell their estates since no one

demanded them anymore, which cause the problem to the bank that no one’s going to pay

loan back.

Ref: http://www.cafebabel.co.uk/politics/article/the-2008-economic-crisis-explained.html

Reflection: the goal is enough for me to achieve for the day. However, I still need

another time to write it down.
DAY 2
8.05.18

Goal: briefing the causes/ effects I’ve researched from the last time.

What I’ve got: People overspend the money buying houses, many estates were

overpriced from its actual value, due to high interest rate from subprime

mortgage. At a certain point, they can’t pay back the loan and its interest rate,

which leads to  2007 banking crisis, the 2008 financial crisis, and the Great

Recession.

Ref: https://www.thebalance.com/what-caused-the-subprime-mortgage-crisis-3305696

Reflection: Now I understand how things went in the event, I’ll dig more in

specific details.
DAY 3
9.5.18

Goal: Understand the definition of technical words

What I’ve got:
-Commercial paper: an unsecured, short-term debt instrument issued by a
corporation, typically for the financing of accounts receivable,
inventories and meeting short-term liabilities.
-A derivative is a contract that derives its value from the performance
of an underlying entity. This underlying entity can be an asset, index,
or interest rate, and is often simply called the "underlying.”
-foreclosure is a legal process in which a lender attempts to recover the
balance of a loan from a borrower who has stopped making payments to the
lender by forcing the sale of the asset used as the collateral for the
loan.
-emerging market is a country that has some characteristics of a
developed market, but does not meet standards to be a developed market
-bailout, an act of giving financial assistance to a falling business or
economy to save it from collapse.
-A recession is when two consecutive quarters of negative gross domestic
product growth occur.

Ref: https://www.investopedia.com/terms/c/commercialpaper.asp

Reflection: Reading is way easier with explanation.
DAY 4
10.5.18

Goal: Research on 2007 banking crisis, the 2008 financial crisis, and the Great
Recession.

What I’ve got: 2007 banking crisis: caused by the use of derivatives. All these
three events happened like a domino started from a vast number of dept. Once too
many people can’t pay back interests as they have no real money to pay back their
loans. All deceived overprice lands are not enough for bank to get the initial
money back. This way made a big loss for most of the US banking system.

Reflection: I started to know the timeline that might help me to explain the event
well. Also, these three subtopics is not enough to know all in a class, I’ll continue
on this next class

Ref: https://www.thebalance.com/2007-financial-crisis-overview-3306138
DAY 5
16.5.18

Goal: dig in 2008 economics crisis

What I’ve got: The crisis began with housing that people loan money to buy house with
extremely low interest rate comparing to present. Few years after, that business started to
stuck and people didn’t have money to pay back, so banks had to increase interest rate and
sell debt for people who didn’t pay pack what they lent. The problem was most of the debts
came from overpriced estates that are not enough to cover the loss which is approximately
$435 billion from around the world. The government needed to spare money to help some
major companies (Freddie Mac and Fannie May in the US, insurance giant AIG, Northern
Rock in the UK, and Fortis and Dexia in Belgium) in case they’re going to bankrupt.

Reflection: There’re many topics that I have to rearrange them correctly.

Ref: http://www.cafebabel.co.uk/politics/article/the-2008-economic-crisis-explained.html
DAY 6
17.5.18

Goal: Find some consequences (obviously not related to the thesis)

What I got: Commodity boom causes bust happened because of economics crisis.
It started from the rise of oil price in 2008 from $25US/barrel(42gallons) to $147US/
barrel(42gallons) due to oil inflation —$71US/barrel as of 2018— which increased the cost of
other goods and services that need fuel to transport— commodities depression—

Ref: http://content.time.com/time/business/article/0,8599,1859380,00.html

Reflection: Sometimes, doing something off-topic is useless to the product but leastways it help
me to understand the story well.
DAY 7
18.5.18

Goal: Find the reasons why oil price drop dramatically in 2009 before it rose again.
Also find basic information of 2008 Financial crisis

What I’ve got: Nothing is particular.

Reflection : there’re some articles that I didn’t understand, I’ll try to get to the point next time.

Ref:https://oilprice.com/Energy/Energy-General/Why-This-Oil-Crisis-Is-Different-To-2008.html
DAY 8
25.5.18

Goal: find a template and rearrange journals

Work log: Create a template
DAY 9
31.5.18

Work Log: Put everything into the created infographic template and arrange it.
DAY 10
4.5.18

Work log: Do the reflection
DONE