Digging deeper

But to understand the root causes of today’s financial disaster, it is necessary to go back in the 90s of last century in the United States during the administration of Bill Clinton and the Democrats when in 1999 his administration radically ease the conditions for granting mortgage loans. The goal was as much citizens of the country to be converted into lucrative debtors of the banking system, as they imply that by “affordable” loans anyone can successfully become the owner of the home, which has always been a dream of the poor. In his herd reactivity population mass rushed to draw loans. The beneficiaries of legal amendments were both mortgage megabanks to otherwise innocuous names “Fannie Mae” and “Freddie Mac”, which became the biggest lenders in the US with 5.3 trillion dollars distributed resources and behind every second mortgage loan (totaling over 10 trillion) in the country. To implement this large-scale lending in turn they took two trillion dollars from China and Japan, which due to its large commodity exports to the US have huge foreign exchange reserves total over 4,000 billion dollars. In thus formed business credit, which was initially developed well and provided good profits, they joined other banks and Wall Street, as well as many high-risk investment hedge funds. Often they are based in the Caribbean and around the US are not subject to almost no financial and legal control. In massive hedge funds focused on money superrich and illegally acquired funds from tax evasion, money laundering, corruption, influence-buying, embezzlement of public funds by officials from privatizations, trading in influence with young children arms, drugs, human organs, prostitution, homicides, etc.
To reduce the associated massive credit risk and to get new, cheaper financial resources to re-occupy profitable US mortgage banks have made loans granted by them in derivative securities and started selling them to other banks around the world that in turn they began to gamble to trade with each other and offer them to its customers. This marked the beginning of the epidemic spread of the US subprime mortgage crisis around the world and so it grew into a global financial pandemic. To facilitate the sale of this new type of “Subprime” – securities (or called “Collateralized Debt Obligations” – CDO`s = `guaranteed debt obligatsii`) formed the basis of the granted mortgage loans, issuing financial institutions ordered (of course against a generous payment) to be assessed their risk of so-called “rating agencies” (`Rating Agensys`). If only from a lack of ability to assess risk “Subprime” -knizhata or because of “Rating” -agentsiite was paid richly for “service”, said securities were unrealistically high, positive evaluation. In typical American style manipulative potential buyers suggested that as an investment product, they do not contain any risk. Because of the misleading positive evaluation and high initial yield of interest from mortgage loans, issuing American banks managed to sell a large quantity of toxic securities worldwide. Banks and funds literally queued up for these products, hoping to benefit from the credit boom in the US. Although every intelligent man outdone “herd mentality” should be able to assess the real risk of these `CDOs`, which multibillionaires and speculator Warner Buffett noted that constitute” financial instruments with the power of weapons of mass destruction “. And the danger to them from the outset was that that initial high profit distributions and risk can quickly turn over a giant loss for everyone.