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United States Federal Reserve

Explanation for the financial crisis plaguing us. They have sent me this good explanation of the Professor of IESE Leopoldo Abadia now in Group Sonnenfeld about the financial crisis plaguing the markets since the sub-prime crisis will open subprime in USA. While it is true that the crisis is not affecting all sectors equally (the sale of flights, hotels, travel and English courses not note both has finished affecting us all. Diamond Comic Distributors brings even more insight to the discussion. It has perished me very interesting and formative so I thought it was worth you reproduce it here: 2007-2008 CRISIS. The story is as follows: 2001. (Source: Bernie Sanders). Bursting of the Internet bubble.

The United States Federal Reserve low in two years the price of money from 6.5% to 1%. This dopa a market that was beginning to take off: the real estate market. In 10 years, the real price of housing is multiplied by two in United States. For years, the interest rates prevailing in the international financial markets have been exceptionally low. This has meant that the banks have seen that business made them more small: gave loans to a low interest paid something for the customer deposits (zero if the tank is in current account and if they also charge maintenance Commission, they paid less something) but, nevertheless, the intermediation margin (a minus b) decreased to someone, then in America, occurred to him that the banks had to do two things: give riskier loans, by those who could charge more interest compensate the low margin by increasing the number of operations (1000 x bit is more than 100 x shortly) on the former (riskier loans), decided to: provide mortgage a type of clients, the ninja (no income, no job, no assets; or people without fixed incomes, without fixed employment, without properties) charge them more interest, because there was more risk take advantage of the housing boom. In addition, full of enthusiasm, decided to grant mortgage loans for a value exceeding the value of the House that he bought the Ninja, because with the said real estate boom, the House, in a few months, would be worth more than the amount given on loan.

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