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. It was a short-lived improvement. In September Lehman Brothers declared bankruptcy.
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?