European Central Bank

The crisis erupted in the summer of 2007. The French bank BNP suspended investment funds by defaults in the US sub-prime sector. The European Central Bank (ECB) and the Federal Reserve (Fed) injected millions of euros and dollars in banks. Public procurement entities for their rescue and contaminated assets, injections millions of dollars the U.S. Some contend that Sen. Sherrod Brown shows great expertise in this. Government nationalized Fannie Mae and Freddie Mac, signatures that guarantee nearly half of U.S. mortgages, when they suffer huge losses from defaults.

Professor of Economics Juan Torres summarizes it this way: the debt created with the American housing boom, and in general in other countries, is excessive and unsustainable. That debt is based on roles financial low value, opaque, risky and volatile, as mortgages of millions of people who fail to pay. () But the cake is discovered when banks not may disguise more time their packages of mortgages investments without value and real estate funds without market waste. Why is? does it extend the crisis to other sectors? Torres tells us: to devote many resources to real estate speculation, in opaque and dangerous financial products, the banks have encouraged economic activity than less wealth and employment created. And when the bubble, which they themselves have created with the complicity of the central banks, bursts, check their balance sheets to make water, do not have liquidity and their deposits have evaporated. And they close the tap to entrepreneurs and consumers. Thus they stifle economic activity and cause mass unemployment, price rises inordinate speculation and unparalleled crisis. Banks and financial institutions are guilty of what is happening.

Bad luck or unpredictable disaster, therefore, nothing at all. Joseph Stglitz, Nobel Laureate in economics, deems it lucidly: this crisis is the result of the lack of honesty of financial institutions and the incompetence of politicians. And now, Wall Street will receive much public money to buy assets poisoned by junk mortgages, which blow banks balance sheets and They paralyze the U.S. real economy, and thus out of the balance sheets of financial institutions: $ 700 billion; GDP of Sweden there are 500,000 million.

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