POL225H: final Flashcards
Securitization
- Sophisticated process of financial engineering that allows global investment to be spread out and separated into multiple income streams to reduce risk
- Bundles of loans into securities and sells them to investors
- 2009: 8.7 trillion of assets globally were founded by securitization
- Examples: subprime mortgages, student loans, and credit cards
Derivatives
Bets on the credit worthiness of a particular company
Credit default swaps
Parties agree that one would pay the other if a particular borrower (third party) could not repay its loans
Subprime loans
A type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans
-Subprime buyers are often turned away from traditional lenders because of their low credit ratings or other factors that suggest they have a reasonable chance of defaulting on their debt repayment
Quantitative easing
Monetary policy used to increase money supply by buying government securities or other securities from the market in an effort to promote increased lending
Elements of state power
- Geographic area
- Population
- Natural resources
- Leadership
- Political effectiveness
- Cultural appeal (soft power)
- Technology
Soft power
- Conducting inquiries and exposing violations of human rights
- Movies, music, fashion
Hegemony
- Dominant power
- Characteristics: cooperation, integration, and multilateralism
- Institutions: United Nations, World Bank, IMF (International monetary fund), GATT (general agreement on tariffs and trade)
- China challenging American hegemony: China is an economic power while America is a military power
GDP
- Gross domestic product
- The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment, and government spending, plus the value of exports, minus the value of imports
GNP
Gross national product
- Total value of all the final goods and services produced within a nation in a particular year, plus income earned by citizens (including income of those abroad), minus the income of non-residents located in that country
- Higher GNP equals higher quality of living
Financial and economic power as the foundation of political power
Debt (when a country is in debt, other countries own the bonds and that gives them power over the United States)
Containment
- Stop Communism from spreading by combating it or supporting combat against it
- All features of war without military engagement
- Arms race, space race, economic competition, wars fought through third parties (Korea, Vietnam)
Economic inequality: When does it matter
- It doesnt if there is economic opportunity
- It does during economic crisis when the rich lose money, and the poor lose jobs, housing and health insurance
Wealth in the US
- Great convergence 1940-1970s
- Greater equality and economic growth
Cities in the developing world
- Overwhelmed infrastructures
- Overcrowding (Lagos, Nigeria)
- Inadequate public services: power, sanitation, transportation
- Unplanned growth, massive slums (Rio de Janiero)
- Small economic and political elites control the wealth, impovrished masses, significant middle class
