1. 1
“Financial Crisis”
“How did money got into trouble out of
nowhere. A financial fairy tale.”

2. 2
Once upon a time there were 2 sides fighting for the money :
1. The good guys
2.The bad guys
• The battle for the money and financial domination started
somewhere between two streets :
• The 1st
one was called Wall street
• The 2nd
one was named The Federal Reserve street

3. 3
Why did a financial and money crisis start?
• The battle began because the good guys wanted to
prevent the bad guys from making more money. No the
good guys were not simply good, they were naïve.
• Bad guys wanted more money because they had seen a
movie.

4. 4
“The movie was called “ Wall Street ”
• Gecko the hero said a phrase “ Greed is good”
• So for many years the Federal Reserve Bank chairman,
someone named Alan made money very cheap by
cutting down the interest rates.
• So the bankers and major players at Wall Street found
out an antidote to cheap money.

5. 5
The antidote was to provide many mortgage loans
to people with low or bad financial situation.
• Soon it became a trend to give many loans with cheap
interest rate.
• But it became even better. The financial engineers
created and invented the derivatives based on
securitization.

6. 6
So suddenly the bad guys could multiply their
exposure to risk
• The risk was becoming bigger as more loans were
granted but as in the Titanic there was a belief that the
market is unsinkable. It only goes up.
• The commissions were great, the bad guys such as
bankers and the federal reserve were getting huge
bonus each year for many periods.
• The risk was getting inflated.

7. 7
The new derivatives era was blossoming
• You could give new loans or money based on other
financial instruments
• There was no proper risk analysis
• There were only the following money characteristics

8. 8
Money
• Easy money
• Cheap money
• Free money
• OPM – Other people’s money

9. 9
One day history repeated itself
• The new money bubble in mortgage sector burst.
• And something funny and odd happened.
• Suddenly too many participants found themselves into
trouble due to bad exposure to toxic money

10. 10
The new virus called greed hit again
• We saw a new wave of bankruptcies
• A credit crisis appearing out of thin air
• A new financial crisis as money markets are very closely
interrelated.
• The bad guys had won once again.

11. 11
The financial crisis is very serious
• Countries like Iceland went into solvency
• Other countries are in trouble
• Wall street where it all began is frozen.

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So how to deal with this financial crisis?
• What to do now that a credit crisis is top serious?
• How to survive in this money mess?
• How to protect and save both money and capital?
• CASH IS THE KING!

13. 13
Money tip 1
• Financial markets show extreme volatility. Many stocks
have fallen to very low levels, but how low is low?
Predicting the bottom is too difficult. Where are the
money gurus now? Stay out of the market for some
period. Opportunities always exist in ups and downs.

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Money tip 2
• Cash is always the king. As interest rates will fall further
keep trying to reduce debt and repay financial
obligations. Many banks will offer deep discounts if you
repay earlier their capital.

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Money tip 3
• Avoid all money gurus. We do not know yet how deep
and serious is this money crisis. When Wall street was
saying buying stocks back in early 2000 we were near
the burst of stock bubble especially the Nasdaq bubble.

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Money tip 4
• No-one cares more for your well being
than you. In a recession cut down
luxurious things like buying exclusive cars
that consume too much gas. Oil may have
dropped but winter is coming and a
possible rise in oil prices is very possible.

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Money tip 5
• When it comes to investing think both short-term and
long-term. Mainly long-term now. We all need food,
electricity, water, raw materials to survive. We do not
need laptops of 2,000 dollars, a 500 dollar laptop will be
ok. So sectors that cover basic needs and are defensive
such as food and utilities may perform better than others.
Diversification is always a golden rule.

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Money tip 6
• Be calm and cool. Behavior finance shows extreme
panic at tops and bottoms of financial markets. Some
few people with inside information made a lot of money
from this crisis. They sold early their stocks. The good
guys simply lost money.

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So watch the market closely
• Watch the money news
• Stay connected with reality
• Be well informed.
• This crisis will most probably take many time, because
so many money was lost.
• The implications are only now appearing.
• Be conservative. Risk is good only if you can control it.

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Finally why do politicians take so much time
to find a solution?
• Politics and money do not go together.
• Yes Economists and Analysts failed again.
• But they warned also months ago. Nobody listened.
• Drastic measures are needed. And effective. No
promises, but action. And many should go to prison
where money is always free.

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• The money on the internet
http://www.themoneyontheinternet.com
• The stock market on the internet.com
http://www.thestockmarketontheinternet.com
The business on the internet
http://www.thebusinessontheinternet.com
Stavros Georgiadis , Economist