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The causes of the 2008 financial crisis: A new perspective

Posted by Editor on September 20th, 2024

The causes of the 2008 financial crisis: A new perspective

Wentao Zhang

One underlying cause of 2008 financial crisis-the housing bubble-started to form in the early 2000s. After experiencing the dot-com bubble and the 9/11 attacks, U.S. economy was facing significant uncertainty marked by slowed economy growth, weakened consumer confidence, and rising unemployment rate. In response, U.S. government, through the hands of Federal Reserve, drastically lowered interest rates from 6.5% to 1% in early 2001 to early 2003, in hope to encourage borrowing, investment and spending [1], this became the direct cause the radical increase in U.S. mortgage lending as real-estate becomes easier to afford, boosting U.S. mortgage debt outstanding from 6753 in 2000 to 12070.5 billion in 2005. [2] Due to high demand, house prices soon start to inflate, by nearly 50% from 2000 to 2006. [3] Simultaneously, mortgage organizations increased sharply, particularly in the subprime market, issuing large amount of high-risk loans to low credit individuals for profit.

There are a few financial tools that played a crucial role in the burst of bubble, they facilitated the leverage of capital by enabling institutions to take on excessive risk for what seemed to be as steady and high return, amplifying the effect of the burst of housing bubble. They are–

  • Mortgage-backed-securities is an instrument that allow investors to invest in bundles of different mortgages. The lack of systematic supervision allowed rating agencies to give unreasonably high ratings for their MBS bundles, even the majority mortgages in the bundle was made up of subprime mortgages.
  • Collateralized debt obligations (CDOs) were created by pooling MBS and other debts, then slicing them into tranches with varying level of risks. CDOs were mainly labeled with high level of safety, drawing the attentions of large amounts of capitals, in fact they were highly complex and risky due to the underlying subprime loans in MBS as above-mentioned.
  • Credit default swaps (CDS) were used as an insurance against defaults on MBS and CDOs. After the burst, CDS directly caused the fall of industry giants like AIG who sold large amounts of CDS but do not have adequate reserves to handle the potential losses.

Home prices first started to decline in year 2007, and cracks in the housing bubble started to appear. The borrowers, especially those with subprime mortgages, started defaulting on the loans, this then started a series of chain reactions. Firstly, the mortgage-backed securities’ value plummeted, then MBS drives CDOs’ value down to the ground. Investors faces lost from their investment, banks and institutions suffer from bad debt, value losses, and the claim from CDSs, causing severe liquidity issues. By 2008, the snowball effect eventually caused the collapse of Lehman Brothers, a major player in investment banking with explosive shockwave effect toward global financial markets, causing widespread panic.

The financial disaster quickly spread beyond U.S. borders, impacting economies worldwide.

The global trade slowed down sharply, and stock markets around the world tumbled. The burst of housing bubble affected banks, businesses, investors, and consumers across continents, leading to the worst global recession since the Great Depression.

 

 

 

 

 

[1]https://www.forbes.com/advisor/investing/fed-funds-rate-history/

[2] https://www.govinfo.gov/content/pkg/ERP-2011/pdf/ERP-2011-table76.pdf

[3] https://fred.stlouisfed.org/series/ASPUS

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Gender Inequality in China

Posted by Editor on August 12th, 2024

Gender Inequality in China: A Big Problem

Even though China has become a strong and modern country, there are still problems with gender inequality. This means that boys and girls, or men and women, are not treated equally in many areas of life. Even though things have improved, there is still a lot of work to be done.

One of the biggest problems is the gender imbalance caused by the one-child policy that lasted from 1979 to 2015. In China, many families preferred to have sons instead of daughters, which led to a lot of girls not being born or abandoned. Because of this, there are now many more men than women, especially in the countryside. This has caused problems for men trying to find wives, and it has also led to more cases of human trafficking.

Another problem is discrimination in the workplace. Even though there are laws in China that try to protect women’s rights at work, many women still have a hard time getting jobs or getting promoted. Some companies don’t want to hire women because they worry that women might leave work to have children. As a result, women in China often earn less money than men, even when they do the same job.

Domestic violence is another serious issue. Although China passed a law to stop domestic violence in 2016, many women still don’t report it when it happens. They may feel ashamed or scared that things will get worse if they speak up.

Wendi Hou

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The Benefits of Intercultural Exchange Between Students

Posted by Editor on August 10th, 2024

The Benefits of Intercultural Exchange Between Students

Yaxin Chen

 

Intercultural exchange among students has become an increasingly important part of education, especially as our world becomes more interconnected. These exchanges provide a range of benefits that go beyond traditional classroom learning, promoting personal growth, enhancing academic understanding, and contributing to more unified societies. Whether through study abroad programs, virtual collaborations, or local initiatives, intercultural exchange gives students a unique chance to expand their perspectives, develop essential skills, and become more globally aware.

 

One of the most significant benefits of intercultural exchange is the way it expands students’ horizons. By interacting with peers from different cultural backgrounds, students are introduced to new traditions, beliefs, and perspectives that challenge their own assumptions. This exposure encourages open-mindedness and helps students appreciate the value of diversity. They develop a deeper understanding of cultures, religions, and ways of life that may be different from their own, which fosters greater tolerance and respect. These skills are essential not only in creating inclusive communities but also in preparing students for a global workforce.

 

Intercultural exchange also plays a critical role in students’ personal growth. When students interact with or live among peers from different countries, they face new and unfamiliar situations. Whether it’s navigating cultural differences, understanding new social norms, or overcoming language barriers, these challenges help students become more adaptable and resilient. The experience pushes them to think creatively and solve problems in innovative ways. These life skills build confidence, making students better equipped to handle the complexities of real-world situations, both personally and professionally.

 

From an academic perspective, intercultural exchange broadens students’ intellectual development and enhances their academic performance. Exposure to different educational systems and teaching styles can spark new ways of thinking and problem-solving. Students may learn to approach challenges more critically or develop a more collaborative mindset when working in teams. For example, a student might experience an education system that prioritizes group projects and discussions, while another system might focus on independent learning and research. Combining these approaches can help students become more versatile thinkers, preparing them to tackle complex global issues. Additionally, participating in intercultural exchanges often involves language learning, which improves communication skills and cognitive abilities.

 

The benefits of intercultural exchange also extend to students’ future career opportunities. In today’s global job market, employers highly value individuals who can work effectively across cultures. Students who have engaged in intercultural programs are more likely to have the communication and collaboration skills necessary to succeed in international teams or businesses. These students are better equipped to manage diverse relationships, solve problems creatively, and bring fresh perspectives to the table. Their experiences also show employers that they are adaptable, open to new ideas, and capable of navigating different cultural environments—qualities that are increasingly important in today’s workforce.

 

Lastly, intercultural exchange contributes to fostering global understanding and cooperation. When students form relationships with peers from different countries, they develop a sense of shared responsibility for global challenges like climate change, social inequality, and human rights issues. These connections not only create a sense of mutual respect but also lay the groundwork for future international collaboration. By promoting dialogue and cooperation across borders, intercultural exchanges can help build a more peaceful, inclusive, and connected world.

 

In conclusion, intercultural exchange between students offers invaluable benefits that go far beyond the classroom. It encourages personal growth, strengthens academic skills, and prepares students to thrive in a globalized society. Most importantly, it fosters greater understanding, empathy, and collaboration across cultures—qualities that are essential for creating a more inclusive and harmonious world.

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Touch of Heart: Discover the Magic of Dim Sum

Posted by Editor on June 14th, 2024

Touch of Heart: Discover the Magic of Dim Sum

Have you ever wondered what this “dim sum” thing that your Asian friend keeps talking about is? Let me enlighten you with knowledge that your brain has never explored. Imagine a meal so delightful that it not only tantalizes your taste buds but also brings people together.

The King of Dim Sum: Char Siu Bao

First of all, let me introduce you to the King of all dim sum, Char Siu Bao. This delectable dish features barbecue pork and a mouthwatering barbecue sauce encased in the best-smelling bread in the world. One bite, and you’ll understand why it’s a favourite for many. It is as if your taste buds went to Disneyland and formed magical memories leaving a lasting impression.

The Messi of Dim Sum: Xiao Long Bao

Secondly, we have the Messi of dim sum, Xiao Long Bao. This dish can create a masterclass inside your mouth, swerving and playing around with your taste buds. Served in bamboo steamers, these soup dumplings have a soft skin filled with hot broth and tasty pork, making them a true dim sum paradise!

The Consistent Favourite: Har Gow

Last but certainly not least, there is Har Gow. It consistently tastes good, no matter what. These shrimp dumplings are wrapped in translucent flour wrappers and are a testament to the simple yet exquisite nature of dim sum. Who knew that some shrimp wrapped in flour could be so good?

Dim Sum: A Heart-Touching Experience

In conclusion, dim sum can truly touch your heart with its delicious taste and communal experience. Whether you are enjoying it with family or friends, it has the magical ability to bring people together. Next time you’re out for a meal, remember this: “Dim sum is not just food; it’s a heart-touching experience.”

Daniel Zhou

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m Sum Paradise: The ultimate heart touching food

Posted by Editor on June 12th, 2024

Dim Sum Paradise: The ultimate heart touching food

Do you know what makes your taste buds explode and your mouth water? Is it sushi, pizza, or beef? NO! It is dim sum! Not only is it tasty, but it also brings people together. It is fascinating that a simple dish can do such a beautiful thing. It does mean “touch heart” after all!

Soup Dumplings: A Taste of Paradise

One of my favourite dim sum dishes is soup dumplings (also known as xiao long bao). Usually, the soup dumplings are served in bamboo steamers. Soup dumplings are a type of dim sum that have a skin on the outside and are filled with heartwarming hot broth and delightful pork on the inside. The idea of soup dumplings was originally conceived in Changzhou, Jiangsu, China. It truly is a dim sum paradise!

BBQ Pork Buns: Fluffy Perfection

My second favourite dim sum is BBQ pork buns. I recommend this wholeheartedly because the bread on the outside is as fluffy as clouds, and the inside is filled with BBQ sauce and BBQ pork. My favourite part is when you take a bite; the BBQ sauce with the pork comes exploding in your mouth, making it delicious. These buns originated in Guangdong.

Egg Tarts: A Sweet Finale

Last but not least, I would like to present a dim sum that originated in Macau. Can you guess what it is? Yes! It is the egg tart (or Dan Ta). It has a crispy crust on the outside and a jello-like substance in the middle. The custard filling is sweet and rich too! The dim sum masters are very proud of their masterpiece. They are adroit in their dim sum crafting skills, which makes people get addicted and keep coming back for more.

Dim Sum: A Magical Experience

Whenever I go to dim sum restaurants, I see plenty of families all together, either eating, chatting, or leaving. I reckon anyone who has a broken family can go out and eat dim sum together since it could bring everybody together. Not just family or relatives; sometimes it could also be friends! Well, isn’t dim sum just magical?

Kailin Zhou

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