The reasons for the current global financial crisis to the 2006 and the outbreak of so-called "crisis of high-risk loans," which introduced the banking sector and U.S. banking in the cycle of loss and disorders, and claimed the lives of hundreds of thousands of American citizens.
The crisis erupted high-risk loans because of the feet of many of the authorized banks in real estate loans to hundreds of thousands of citizens with limited income, ignoring the rule of caution and risk assessment.
And adopted the banks of this approach is characterized by unprecedented growth of the real estate sector and a significant reduction of interest rates in place, which resulted in significant numbers of Americans to the conviction that the highly favorable opportunity to buy a house.
With the sudden increase of interest rates in the banking markets of America, a large number of Americans have been unable to repay their loans, and the numbers have increased over the months to create an atmosphere of panic in financial markets and among investors in the real estate sector.
The affected banks in the relevant high-risk loans more than other high interest rates, and their impact on the situation of borrowers with modest incomes.
As soon as the first disturbance, accelerated the confiscation of bank Sknat unable to repay the loans and sell them on the back of a sudden and severe crisis for the real estate sector is a result of declining prices by much.
The series deal with the repercussions of the financial crisis since the outbreak of the credit crunch, high-risk, I found the central banks in the United States, Europe and Asia are being forced to move, leaving her only the choice between changing interest rates, pumping money into banks affected.
The U.S. Federal Reserve deliberately approach the first option, which took the initiative in many times to reduce the rate fell from 5.25 percent in June 2006 to 2 percent in April 2008.
Not only has the U.S. government in this action, but has chosen to go away in their quest to prevent the spread of the crisis, which decided to nationalize the three big banks.
Continuation of the crisis .. How long?
The predicted most of the South Korean companies to resolve the global financial crisis within two or three years, according to results of a survey conducted by the Chamber of Commerce and Industry in Korea and attended by 180 companies.
Considered 83.9% of the companies that were having their views that the solution to the global financial crisis may take between two and three years, while 11.7% felt companies to address the crisis will be in one year, and expected rate of 4.4% of the companies that the solution will be in five years.
The poll, reported the Qatar News Agency that 88.9% of the companies participating in the survey have confirmed that the U.S. economy will suffer long-term recession like the one suffered by Japan in the nineties of the last century, and drew in this context to budgetary constraints and the reduction of new investments.
The predicted 51.7% of the companies continued economic problems, and called for 66.7% of the companies that participated in the poll, the Government of South Korea by pursuing appropriate policies to stabilize interest rates and exchange rates.
Developing countries, you pay the price?
He warned Minister of Economic Development Othman Mohamed Othman from U.S. and European attempts to shed the costs of treating the global financial crisis on the shoulders of China and developing states, including the Gulf countries and possibly Egypt.
Osman ruled during a speech before a group of senior management to succeed, no invitation to exploit the situation to demand the dropping third world debt, saying: America will ask help from those countries, China has negotiated to bring down part of the debt to Washington, which amounted to 4.1 trillion dollars.
He noted in a speech reported in the "Egyptian Today" that the United States would resort to borrowing to pump more investments in the real economy and infrastructure along the lines of what the developing countries now.
Osman described as the worst financial crisis in human history, but it is expected to be settled in a period of 6-12 months, according to characterize this crisis quickly initiating treatment and there was some clear coordination between the principal parties, the view that the crisis is not the end of the beginning of capitalism is not socialism
The Minister of Development said that Egypt has made several mechanisms to deal with the crisis that will be the most serious consequences down the growth rate. He pointed out that steps were supposed to compensate for the losses that will take place by the financial crisis, estimated at $ 4 billion, including the reliability of the Arab world and Saudi Arabia and Gulf money to compensate for the lack of foreign direct investment and also rely on the strength of domestic demand.
He stressed that the agreed increase government investments even if it led to an increase in the budget deficit, and it will work to reduce inflation to 10 -11%, and which will help that 85% of imported inflation, and that world prices tend to decline.
Osman expressed his concern and the drift and the producers behind the rumors and impressions, and neglecting to focus on export and domestic market or to reduce production, revealing that the government differentiates between the two approaches is the first to give incentives to producers and exporters and the other to increase investments. May end up combining them.
Fallout
According to press reports that U.S. citizens have begun to rationalize their spending on consumer goods in anticipation of the consequences of the financial crisis gripping their country, which is feared that over the economic situation worse.
It has become the Americans tend to economy in expenditure throughout the year following the decline in value of their homes and high gasoline prices, according to The New York Times.
In recent weeks, with echoes of the financial crisis on Wall Street in New York to Washington, it seems that consumers have resorted to rationalize spending sharply.
Even with the government started work on implementing the plan of a massive rescue the financial system from Hdth, consumer confidence has been shaken so badly probably will not be able to continue wasteful consumption patterns soon.
According to statistics, interviews were conducted throughout the United States and published recently, car sales and a decline in passenger traffic decline and restaurants suffer from a lack of pioneer and fewer numbers of customers in the shops.
In a related development, revealed by the Washington Post, citing sources familiar with the situation that the U.S. Treasury Department intends to use penile Khkuri - Assistant Minister for International Affairs and a former senior Goldman Sachs - to supervise the government program to save the financial value of seven hundred billion dollars.
The Khkuri a close adviser to Treasury Secretary Henry Paulson, who worked with him during the credit crunch and Oaanoh on the drafting of legislation on the rescue plan.
It is expected that the salvation runs Khkuri temporarily until you find the Treasury of the program runs on a permanent basis, according to the sources, who asked the newspaper not to disclose their identities because they are not authorized to make such statements.
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