Professional English Online © Cambridge University Press 2009
Professional English Online
The crisis of credit
In pairs, discuss the following questions.
1 What is the credit crisis?
2 Who does it affect?
Watching and listening
1 Discuss the following questions with a partner. If you don’t know the answers, try to guess.
a Which two groups of people has the credit crisis brought together? What do these groups represent?
b What do the metaphors of Wall Street and Main Street represent?
c Where did investors in the US traditionally go for a safe investment?
d Why did this traditional investment become less attractive?
e Where did all the cheap credit come from?
2 Now watch the first part (from 0:00 to 02:03) of the following video and compare it to your answers.
3 With a partner, try and explain the following words and phrases from the extract.
g mutual funds
b collateralised debt obligation
h pension funds
c credit default swaps
i return on investment
d frozen credit markets
j sovereign funds
e general surpluses
k subprime mortgages
4 Watch the extract again and compare your explanations with those on the video.
5 Imagine you are trying to explain the concept of leverage to a non-specialist. Discuss with a partner
how you could explain it in simple terms.
6 Now watch the second part (from 02:03 to 03:15) of the video and make notes under the following
a normal deal a deal using leverage.
7 Discuss the following questions with a partner.
a How did Wall Street become tremendously rich?
b How did Wall Street connect investors to homeowners?
c How do mortgages work? Explain to your partner using these phrases:
a down payment a mortgage broker a mortgage lender commission
d How can an investment banker become the owner of thousands of mortgages?
8 Now watch the third part (from 03:15 to 04:37) of th