Dynamic Discussion

Case Study
As you develop your analysis of the scenario which follows, please keep in mind that there is no right or wrong answer. The purpose of this exercise is to stimulate creative thinking. That is, you can speculate as wildly as you like each time as to the missing factors in the case. Also keep in mind that the case will evolve over the course of the terms with no foreseeable pattern or end to it. Subsequent additions do not necessarily have to follow any logic. In fact they may represent "real world" shocks. In your analysis, try to anticipate what were the causal factors and what the implications are for individuals, firms, the domestic economy, and the global economy.
Part 5
The financial crisis of 2007 through 2010 was not limited to the United States. The ABCPs and CDOs were purchased internationally by both institutional and individual investors. There were similar devastating results, with foreign bank failures and declining stock values.
As well there was a "De-Leveraging" of foreign financial institutions, as assets needed to be sold "liquidated" to cover debt maturity dates because the credit markets were frozen. At the same time a "currency crisis" was building, as investors were transferring huge amounts of capital into preceived "safer" currencies such as the Yen, Swiss Franc and the U.S. Dollar. This had significant effect to emerging countries, who had to go to the international monetary fund for assistance.
Please discuss the following:
Is a country always worse off when its currency is weakened (falls in value)?
During the flight to safety experienced at the end of 2008 the U.S. Dollar gained in value against the Euro and the British Pound. What effects did this have on the U.S. Economy?
Did the consistent lowering of the Federal Funds Rate Target during 2007 & 2008 have an effect on the exchange value of the U.S. Dollar?