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Global Financial Crises: Insights on Exchange Rates and Economic Confidence

The world faces unprecedented financial crises, as highlighted by renowned hedge fund managers who attribute the turmoil to systemic issues. With warnings from IMF officials and global leaders about a recession unparalleled in history, the narratives stress the urgency of understanding economic fundamentals. Key themes include liquidity bubbles, the impact of confidence on investment decisions, and the shifting political landscape defined by economic hardships. As we navigate through this complex crisis, the historical context of exchange rates plays a pivotal role in shaping economies like Hungary’s.

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Global Financial Crises: Insights on Exchange Rates and Economic Confidence

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  1. The globalcrises and the Exchange ratesystems

  2. Agenga of thecrises

  3. 2 confidence and optimism

  4. 3 Liquidity bubble

  5. Five of the highest paid and most powerful hedge fund managers, from left, George Soros, James Simons, John Paulson, Philip Falcone and Kenneth Griffin, blamed the current financial crisis on the ‘system itself’ when they testified before a US congressional committee hearing on hedge fund regulation 13-11-08

  6. Would you be willing to bet on roulette or a game of cards if you did not fully understand the workings of the game? Investors who lack a firm sense of valuation face just such a set of circumstances. What do the numbers on a roulette wheel add up to?

  7. “The reality is that this is becoming the most serious global recession for, I’m sure, over 100 years, as it will turn out.” He warned that events worldwide were moving at a “speed, pace and ferocity which none of us have seen before” and banks were losing cash on a “scale that nobody believed possible”. “The economy is going to define our politics in this region and in Britain in the next year, the next five years, the next 10, and even the next 15 years,” said Balls. “These are seismic events that are going to change the political landscape. The Current Crisis 1: Ed Balls Feb 2008:

  8. “the largest financial shock since the Great Depression.” IMF. The UK Financial Services Authority also gave a warning, but milder, that the recession “may be deeper and more prolonged than expected”, and added that the global financial system had “suffered its greatest crisis in more than 70 years”. The Current Crisis 2:

  9. “We are facing hardships that come once in 100 years.” Takanobu Ito, new head of Honda. 24-2-09 “The classic economic models and theories cannot be applied, and future development cannot be foreseen.” Jean-Claude Trichet, ECB President. 23-2-09 The Current Crisis 3:

  10. “There is no doubt that we are living through the greatest financial and economic crisis in living memory.” Jose Manuel Barroso: President of the European Comission. The Current Crisis 4:

  11. Paul Volcker, at the same conference, echoed Mr. Soros' sentiments, "I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world." Power of Money and Finance: 20-2-09:

  12. “For the first time in the post-world war two history we have a generation that seriously doubts whether the next generation is going to live better than themselves. • FT 12-3-09 Wouter Bos: Dutch Finance Minister:

  13. Crisisinevitable: Open and small country • SubprimecrisisintheStatesin 2007 Response: o • No estatebaloon • No toxicinstruments Result: ? Hungary and thecrisis

  14. Indebtness of theHungariancitizens? • Under EU average • Inforeigncurrency • Dates of thecrises: • 1980’s • 2002 • 2008 Hungary and thecrises 2

  15. Twosides of changeof Ft exchangerate: Weakening Ft • Exporters? • Foreigncurrencyborrowers ? Hungary and thecrisesandtheexchangerate

  16. The end?

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