Directions for assignment: view the PBS documentary “Inside the Meltdown” found at: http://www.pbs.org/wgbh/pages/frontline/meltdown/view/
This is really, really good, I promise! It does an excellent job explaining what caused the “Great Recession,” which took several years to limp out of. Many scholars argue that the Great Recession of 2008-2009 and subsequent economic insecurity is a big contributing factor to our current political polarization. It is also more timely than you might think since some of the financial instruments that led to the crisis are gaining popularity once again! The clip is about 55 minutes long. Click on the big, green arrow to start the video, and take notes while watching it. If you’d prefer to read the transcriipt, click here.
Then type up complete responses to the following questions.
1. What factors led to the collapse of Bear Stearns? Cite specific factors.
2. According to the video, what are “credit default swaps”? How do they relate to the financial crisis?
3. What is “moral hazard”?
4. Did Henry Paulson decide to bail out Lehman Brothers? Do you think he made the right decision — why or why not? How did the markets and the banking system react to his decision?
5. What were the main factors that caused AIG to collapse?
6. What is meant by the term “capital injections”?
7. After viewing the video, has your opinion regarding government intervention changed? (If so, how? If not, why?)
8. What did you think of the video overall?
