Subprime mortgage crisis
It’s a lasting real estate crisis and financial crisis engendered by a dramatic rise in mortgage delinquencies and foreclosures in the United States, mostly with harmful consequences for banks and financial markets in the world. Roots of this situation are in closing years of the 20th century.
Subprime mortgage crisis became apparent in 2006/07 by dropping estate prices and has heaved into view real weaknesses in financial industry regulation and the global financial system.
When adjustable-rate mortgages (with periodically adjusted interest rate) began to reset at higher rates, mortgage delinquencies rised. Securities backed with subprime mortgages, held by financial firms, lost most of their value. It caused a huge decline in the capital of many banks and U.S. government sponsored enterprises or initiatives, made a credit around the world tighter.
In 2008 (March/April) the most important banks in U.S (Merrill Lynch, Goldman Sachs, Morgan Stanley, Lehman Brothers, Citigroup) got some hurried benevolent fund drawing on financial reserve from various states. All in order to avoid progressing domino effect, banks’ crash, smash-up of businesses, general unemployment and depression alike in 1929.
Stability plans, regulatory proposals and long-term solutions are intruduced to minimize the impact of the current crisis and prevent recurrence.
By February governments of states which belong to G8 have initiated rescue operation on about 3 bln $. In April 2009 G20 Leadrers Summit, which was created as a response both to the financial crisis of 2007–2010 and to a growing recognition that key emerging countries, adjusted that money markets need to be based on more strict regulations (concerning ex. hedge fund; liquidation socalled “tax havens”; establihsment an international trade sinking-fund) and be under constant surveillance.
The financial crisis, that has spread across all global markets, does not remain without an impact on Poland, although it was passing by in the beginning. Now noticable are: limitations on credits granting, speculative attack on polish currency, zloty in decline, financial problems of enterprises.
Polish market conditions are rated favourably against a background of European economies.
Poland was the only member of European Union with a grass domestic product growth during the crisis.
Do you have some observations associated with current subprime mortgage crisis?
What is you opinion about it?
Most of economic texts make me feel more blond that I actually am ;-) Thanks God, I had never had to take any loans. All the stories that I've heard about mortages confirm that taking them means spending long hours on filling papers and arguing with clerks. During last months it meant even more papers and more difficult talks...
ReplyDeleteI'm not very interested in the economy and I must say that I haven't perceived the crisis very painfully. Of course, I have heard about it many times and I think that they really are some problems in the world's economy but they may be a bit exaggerated... I think that rich countries suffer more than the more poor one like Poland. We'll see if our financial form will change in next few months...
ReplyDeleteI am not interested in economics and comprehending from field finances , bankings are alien to me and I don't understand them. But if media news reports were true it in our country a lot of things wouldn't be in shops. In my opinion the world-wide crisis didn't reach to Poland. It is possible that some minor changes for the worse but I think that it is a result more propagandas than true of crisis.
ReplyDeleteAt present i do not curry about economics. I study, I rent a flat and i do not have time to scan actual economic situation, which is changing frequently...What is more i believe that when I will applay for credit the economic situation wiil be more friendly for me.
ReplyDeleteI'm also not interested very much in economics. Personally I haven't sufferd from crisis (till now). Even though Polish people are considered to be pesimist last year proved that in economics we are rather optimistic. That helped us to overcame crisis so I don't want to scary. It will be good.
ReplyDeleteWell, crisis has had many negative consequences. But to us, Poles, it has given a reason to feel good - "Poland was the only member of European Union with a grass domestic product growth during the crisis." ;)
ReplyDeleteSubprime mortgage crisis is a very complex problem. It would be really irresponsible to blame only one thing beacause lots of factors are connected with it. But in general to most important case is that companies are profit orientated so they want to achieve best results in short run but in longer run it ends with financial crisis like the one we have now espeacially in USA.
ReplyDeleteThe best medicine for crisis, especially financial crisis is humour. Look: http://news.bbc.co.uk/2/hi/business/7663475.stm
ReplyDelete:)
Personally I haven't noticed any signs of the crisis bothering me, apart from a roumor in TV and newspapers. On the other hand, I've heard about many people in Poland loosing thousands of zlotys, so it surely can't be said that crisis went around our country. Hopefully, the market situation is getting better and things are coming back to be normal again.
ReplyDeleteI also can't see many changes caused by economic crisis. Of course I heard a lot of sad information about companys in Poland but fortunatelly as I said it did't touch me. The only thing I don't like is that dollar cost now 3 zl and before it was something about 2zl and it was cheapper for me to buy staff from USA on the internet.
ReplyDeleteWe can't remain untouched by world economic crisis because after all our market is connected with other countries. Ofc it has been the toughest season for Polish investors as lot of investments devaluated but for ordinary people as well: remember about high rate of unemployment, difficulties with getting even very unprofitable loan or high prices of alimentary or services.
ReplyDeleteI don't think that Poland economic market was strongly affected by crisis maybe Polish investors did suffer tougher time but it's not big deal. Average people didn't notice any difference and that's the most important thing maybe it is harder to get a job or get a loan but it's nothing we can't live without.
ReplyDeleteI'm not good at economy...mostly i don't know what they want from me, when thay talking something about it...
ReplyDeleteI haven't got any intrests connected with economy...becouse I must confess that I don't understand it. Of course I know about big economic problems which were comprised all of the world or our country but it is all.
ReplyDeleteCrisis in economy isn't wrong. It is necessary. But panic of people is wrong. It is named "bank panic". Every person who has money in bank which is threatened with collapse, which started to spend every money it has, want to get back money. But it is mistake. People's mistake. Because it is normal that bank hasn't money! The better that the bank has less money. This money wchih we get on bank, must earn another money! And when suddenly every person want to get back money, bank falls. Subprime credits - aren't a good idea, but many people need them.
ReplyDeleteI'm not an expert in economy but I agree with Agata. If there appear crisis it means that something function bad in economy and it should be changed. To be honest I didn't experience effects of latest crisis and I think that all this confusion around it was creating by media. On the other hand I know a person who was dismissed because of budget cuts.
ReplyDeleteIf someone read Rich Dad Poor Dad by Robert Kiyosaki he knows that crisis is the best moment to invest your money in real estate. OF course this book simplifies that whole economic process, but conclusion is one - if you have enough money you should by a house from people who don't have cash to pay off debts. The real opportunity for that probably will happen in next 2 or 3 years so we have time to save sth for thios occasion:)
ReplyDeleteFinancial crisis is for sure good time to invest in stock market. Shares and bonds have fallen a lot so it is the best moment to buy them.
ReplyDeleteI also don’t find economy and any subjects related to it very interesting. Never the less I have heard quite a lot about the crisis, because of the media, who constantly talk about it and make it impossible to avoid hearing about it.
ReplyDeleteI agree that Poland was effected by it very mildly, and only a small percentage of the polish society has suffered from it directly. The only situation about which I have heard that really occurred in Poland was the increase of the unemployment rate.
Last subprime mortgage crisis didn’t really touch Poland as much as it was supposed. Are we lucky? I don’t think so. Global market still isn’t safe and the reasons because of what the crisis appeared (I mean harmful mortgage activity of banks ) were reduced only for a moment.
ReplyDeleteIt is always better to have an eye on our savings.
If such a giant of business as Lehman Brothers declared bankruptcy I can only repeat my opinion that no solid, frugal citizen can be sure on the safety of his savings and possessions. Like uncontrolled currrent comsumtion also long-term private investments to martages achived irrational and absurd level. Just a next example of irresponsible behavior not only of John Smith but outstanding financial institutions. What is terrible - the phenomenon of expenditure without cover affects not only individuals and families but seemed to be serious government.The creative accounting has become also method of providing financial polics by goverments. Mortages crises effected also many european countries, but many governement like banks betrayed and hidden the true picture of economy.
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