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The American economy crisis of the sample of 2007-2008 took place, and it is possible to draw the first conclusions already. Contrary to many expectations, it has not led to a planetary accident with bankruptcies of the whole countries. The second Great depression has not begun as experts predicted. But the crisis caused hundred thousand small tragedies and people were deprived of their houses and savings in US dollars. Strangely enough, but Americans were stricken less than inhabitants of other countries. We shall try to understand whose guilty it was and how ordinary Americans were stricken.

John and Jane Dow

It is well known that US police appropriates such names to people whose real name and surname is impossible to establish. And we shall conditionally use these names to call those “unknown” Americans with astable incomes who were given accessible hypothecary credits and started the chain of economic cataclysms all over the world.

Georges Bush came into the White house and together with it Americans got cheap money. Judge: Bush came at the end of 2000, and from May 2000 until June 2003 the key interest rate lowered with 6,5 up to 1 % in the USA. Cheap money had to work and banks found an application of them. For the first time unreliable and simply needy Americans with bad credit history had got the luck to take credit and purchase a house.

But the most important thing is that cheap credits were used not only by those people who had no place to live. Credits were also taken by speculators, hoping to resell habitation. If at the beginning of 2000 John’s and Jane’s share did not exceed 10 % of total taken hypothecary credits, to the beginning of 2007 this figure had grown almost up to 25 %. As a whole for today in the USA mortgages were given out for the total sum of $3 trillion while almost 1, 5 million Americans have declared their personal bankruptcy or are going to make it in the near future.

Miscalculations of investors

The fairy tale for buyers of the real estate proceeded not for long time. The number of the people who had bought houses on pleasures and were not able to pay for them grew and grew, so banks began to cry bitter tears. They took away houses of the people, conditions of purchase toughened again, only to sense? Try them sell now. And people whose houses were selected didn’t care because those who had paid nothing or those who had paid a small first payment had nothing to lose. Their monthly mortgage payment was the same sum as payment for demountable habitation, and for many people it was more favorable to give back their houses than to try to make their ends meet.

Following problems of hypothecary bankers difficulties also arose at investment banks which had bought hypothecary bonds using an opportunity. The matter is that when a bank gives out a credit for habitation it insures its non-return and often sells debts to other financial institutions with a discount. In the beginning of the crisis the mortgage of investment portfolios of all largest world investment banks including European had been hammered under an outset. Therefore the crisis instantly splashed out the bounds of the USA.

- Holders of the mortgage securities, who had lost payments of unfair borrowers, tried to sell the incorporated property but it appeared that maintenance of hypothecary credits was considerably below of a duty cost. The companies began to count up their losses, - experts of “Zurich Capital Management” wrote in the special report.

The first victim was one of the largest American hypothecary companies - New Century Financial Corp. Others followed it. The crisis affected even halfstate hypothecary corporations - Fannie Mae and Freddie Mac. These corporations did not buy bad quality hypothecary credits directly, but the general wave covered them too. Fannie Mae and Freddie Mac capitalization decreased on 50 %, however the State supported “its own” and as a result corporations resisted.

Crisis is not half passed

Accuse do not accuse, money of investors will not be returned. According to Goldman Sachs investment bank the economy will lose nearly $1, 2 trillion from the hypothecary crisis, and $460 billion of that $1, 2 trillion belong to the American financial companies.

However the American economy managed to avoid scale shocks. The Federal Reserve System lowered the rate up to 2 % for the last months. It gave credits from its reserves to everyone who experienced difficulties with money and now the market waits even for growth of these rates. But that is not because of the crisis ended.

The trouble has come, open a gate

FRS solved one problem but now it has a more serious problem. The US dollar weakens and there is high inflation and unprecedented jump of prices in the raw markets. Unemployment has now reached 5,5 % in the USA and it still grows, the fuel prices have exceeded $4,39 for one gallon and inflation has exceeded 4 % for the first time for long years.

There was ” a great resettlement of people ” at stock markets - speculators changed traditional share platforms for trade in raw materials therefore the barrel of oil is just about to pass a mark in $140. Oil speculation has already given results and not only in hard pockets of traders. For the first time for long years Americans began to drive less because of high fuel prices: 8 % absolutely refused driving cars and changed cars for public transport, more than 8% gave up work which was far from their house. The economy moves less, and the traditional locomotive on behalf of housing sector which always pulled the USA has given failure. Whether these are consequences which the future president of the USA will have to disentangle?!

Results of crisis: the end of dollar domination

While banks are groaning many experts consider the crisis and the falling dollar have been specially conceived by the American authorities in order to improve economy and “to let out pairs “. And the truth is that any crisis has therapeutic consequences. First, the American economy began to grow really owing to the cheap dollar which stimulated import and the massed state support. The system of ratings calculation for securities varies, regulators began to approach to the admission of new tools on stock markets more carefully and reliability of financial tools now costs dearly. And those who had lost for conditions in the heat of euphoria received a good lesson.

Secondly, it was unexpectedly found out that not only the USA but mostly developing countries can “carry” the US economy. The analysis of world gross national product and the contribution to it of developing economies will be swept up especially on results of 2008. Already now it is possible to tell that Russia, China, India will not slow down rates of growth and thus compensate stagnation in the USA and Europe. It is not important that the East has helped the West, but also that the world has changed and the role of yesterday poor countries is increasing now. By the way we observe a new wave of globalization as a consequence. In fact China and different countries of the Near East have spent tens and hundred billions dollars for buying up western actives which had fallen in price. The largest banks and investment companies have already involved $299 billion for restoration.

At last thirdly, world supremacy of dollar comes to the end and the American money gradually hand over its positions to other large currencies, and such money as a ruble is given a chance to become regional reserve currency.

In the near future the world Central Banks will be absorbed by decision of the problem of how to decrease inflation and will try to lead to balance the reeled financial system. It is not excluded that a collapse can be expected in the oil market, otherwise because of dear oil the whole world gross national product will not grow. It is obvious that rates will grow in the USA and the dollar will rise in price.

Sight from America: blessing in disguise…

Arpine Bablojan (Boston)

On one fine January day of this year I came on the Facebook.com as usual in order to dull my feeling of nostalgia. In a window for entering messages the following started to blink about with an abundance of interrogative and exclamation marks: «Greetings!!! How are you doing??? What’s the news from the USA??? How do you feel the crisis there? “

So for the first time I heard that we had crisis “there”. As an absolutely ordinary person to local measures (i.e. concentrated on family, work and payment of accounts) I usually tried not to burden my modest life. At the best edge I could glance at the public channel as three brigades of rescuers pulled the cow out of a pool because this was a big event in local scale.

However I knew about that something had happened to the real estate market. In the past year I was lucky enough (whether?) to buy a new house.

Purchasing of the house is one of the basic steps on the way to the American dream. Therefore the family finance was considered and planned proceeding from a situation on the real estate market. And the situation worsened from the economic point of view and improved from the point of view of a recently arrived potential American citizen with an average salary who had intentions to buy a house. Two years ago if you wanted to purchase a house it was necessary to show worthy credit history (I had no even unworthy) and the certain quantity of percent from the house cost in a non-cash money form(which I didn’t have in necessary quantity) and also the information on charges and incomes. This information should show, that I had more incomes than charges (and, fortunately, it was so), and incomes had to exceed charges on the sum of monthly payment of the mortgage (and it did not carry to me in here).

In general two years ago the real estate did not shine to me. Though there were lots of houses in the market. Nobody bought them and banks cried bitter tears and searched for an output improving conditions of the mortgage. Owing to that our day came because the necessary sum of the first payment for purchase fell, the information on incomes and charges was allowed to write according to a buyer (so according to me), and by that time my credit history had been drawn already. In general we bought the house.

Now I hope that the real estate market will go through any next crisis soon and the prices will rise many times over.

However besides the real estate I also possess securities. As well as many other Americans who worked in the open joint-stock companies, I became a shareholder during “pre-crisis” time and for my own money I got papers with certain value. Actually to my big regret this value began to fall promptly. Until now it has fallen almost twice because of the crisis. I blamed my own company until I didn’t understand that we had crisis in the country and everything fell and I was even delighted a little. Everything falls so it is not so terribly. Everything will rise too all together. Americans are optimists at heart and optimism is infectious. And for Americans the crisis is as if it is not the crisis. They receive their salary in dollars and the prices are in dollars, so what should we be afraid of?