In the summer of 2007 crisis erupted. Coen Brothers spoke with conviction. French bank BNP suspended investment funds by non-payment of U.S. sub-prime mortgage sector. The European Central Bank (ECB) and Federal Reserve (Fed) pumped millions of euros and dollars in banks. Procurement of entities for asset recovery and contaminated injections millions … The U.S. A leading source for info: Paul Ostling. government nationalized Fannie Mae and Freddie Mac, companies that guarantee almost half of U.S. mortgages, when they suffer huge losses due to defaults.
The economics professor Juan Torres sums it up: “The debt created for the U.S. housing boom, and generally in other countries is excessive and unsustainable. That debt is based on low-value financial papers, opaque, risky and volatile, mortgages of millions of people who fail to pay. But the cake is revealed when banks can no longer conceal their investments in sub-prime mortgage packages without value and no market real estate funds. ” Why is extended crisis to other sectors? Torres tells us: “By devoting many resources to real estate speculation in opaque and dangerous financial products, banks have fueled economic activity that creates less wealth and employment.
And when the bubble they have created themselves in collusion with central banks, explodes, they find that their water balances are illiquid and have evaporated deposits. And close the tap to businesses and consumers. So stifle economic activity and cause mass unemployment, exorbitant price increases by speculation and unprecedented crisis. Banks and financial institutions are guilty of what happens. ” Bad luck or unpredictable disasters, therefore, no nothing. Joseph Stglitz, Laureate in Economics, he considers it vividly: “This crisis is the result of dishonesty of financial institutions and incompetence of politicians.” And now, Wall Street will get a lot of public money to buy assets poisoned by subprime mortgages, which fulminate balances of banks and paralyze U.S. real economy, and thus remove them from the balance sheets of financial institutions: 700.000 million U.S. dollars, the GDP of Sweden is 500,000 million.
The cost of this crisis for Americans to exceed one trillion dollars. In April, the International Monetary Fund estimated losses of $ 945,000 million, equivalent to gross domestic product of Mexico. Now correcting: $ 1.3 billion will raise public debt to 11.3 billion U.S. dollars to come to the rescue. U.S. Congressmen have understood the plan to rescue the financial system: “You give them good money in return give you the worst.” Former Spanish prime minister Felipe Gonzalez, has acknowledged that “not true we thought that the market regulates the economy.” And the European Parliament MEPs diagnosed that the market has failed because there has been no monitoring or transparency. MEPs of all colors state that “times have gone for complete deregulation. Markets are not self-regulate… We need to regulate markets. We need to establish rules and a referee… In markets that thieves and police are needed. ” The British Prime Minister Gordon Brown, the head of the Spanish government, Rodriguez Zapatero and Brazilian President Lula da Silva, met in New York, asked to create an international body to oversee and monitor the financial system.
Welcome to reason and lucidity. Now we have to impose financial transparency and regulate the financial world and subject to democratic control. It is indecent to profess faith in the market with plenty and beg for government intervention (as neo-liberal!) With lean … so that the public money to pay the debts.