ECONOMIC CRISIS UNLEASHED IN 2008

The current economic crisis is a crisis for many announced that like the 29 crisis is precipitated mainly by speculation in asset prices associated with mortgages; seems clear that the crisis was triggered by the subprime real estate, both in USA and in Europe, this bubble burst when the world was again plunged into a global crisis.

It all began with a period of prosperity in which people chose to buy property, because they felt safe assets. The dream of "home ownership" became a reality for everyone, including those who had no job or income (these were the so-called subprime mortgages, which accounted for 20% of all mortgages by 2005 ). The abundance of liquidity was generated by the sharp reduction in interest rates from the Federal Reserve (FED), the equivalent of the Central Bank, in an effort to stimulate the economy after the recession of 2001 reduced the interest rate in 27 opportunities between 2001 and 2003 to reach 1%. People borrowed, bought houses with the money received, which contributed to increased property value and therefore seek another loan to another bank, placing the property purchased as collateral (mortgage) before.

To complicate matters, in 2003, fears of inflation, given the increase in spending power, the Fed decided to raise the interest rate in just two years up to 5%, so those who had borrowed to the extent that had a variable interest rate, face severe difficulties in repayment. Prices fell and there was the crack of the financial system since the debt could no longer afford.

Initially it was thought that the crisis was located in the mortgage industry, but then expanded into the financial system, not just the United States but around the world. Today, as a result of financial integration (the so-called financial globalization), the impacts of the crisis have gone further, hence the emergence of anti-crisis plan, plans of countries not yet affected, they expect the backlash of the crisis.

Ferrari, Cesar. Uncertain times. Causes and consequences of the global crisis. [Online Database]. In: Journal of Institutional Economics. http://find.galegroup.com/itx/infomark.do?&contentSet=IAC-documents&type=retrieve&tabID=T002&prodId=AONE&docId=A191309233&source=gale&srcprod=AONE&userGroupName=udea&version=1.0. Date accessed: 22-03-09.