This paper aims to analyze the effect of the American Subprime crisis of 2007 through the perspective ofHaynes Minsky’s model according to Charles Kindleberger. The investigation revolves how the anatomyof a financial crisis develops and how it is applicable to the Subprime crisis. More specific conclusionsare derived from applying Minsky’s model to the three largest American indices; Dow Jones industrialaverage, S&P500 and NASDAQ. To deepen the analysis the Case-Shiller home price indices acts as a second parameter tocompliment Minsky’s perspective with Robert J. Shiller’s analysis of American home prices. Furthermore the total debt for consumers owned and securitized is analyzed to reach anunderstanding of the scale of problems if Minsky’s model predicts a crisis. The aim is to answer how the financial crisis has developed according to Minsky’sanatomy of a financial crisis and if the crisis has not fully developed how it might continue. The creditmarket was brought to a virtual halt after a large investment bank was forced to borrow from theFederal Reserve to survive. This came to be the trigger of the subprime crisis where uncertain houseprices were the focus of the summer of 2007. Kindleberger may have the answer for how the currentcrisis could develop, which through financial analysis, may reveal the future pulse of the US markets. As the conclusion in this paper reveals that the three parameters have very differentcycles when Kindleberger’s interpretation of Minsky’s model is applied. The stockmarkets indicies havetwo cycles of the financial anatomical analysis, the credit market had two cyles and the housing markethas had merely one cycle between 1987 and 2009. The reason for this is most likely that these marketsare correlated yet the movements in pricing seem to lag between the markets, hence the difference in theamount of financial anatomical cycles.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:uu-138064 |
| Date | January 2010 |
| Creators | Widegren, Marcus |
| Publisher | Uppsala universitet, Ekonomisk-historiska institutionen |
| Source Sets | DiVA Archive at Upsalla University |
| Language | Swedish |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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