Sunday, September 21, 2008

The economic crisis

I think we are in the crisis of economic. The global economic is very complicated now, so I hardly understand what is happening on that. But I will try to understand it and try to figure out it.

The one of reasons of economic crisis is the problem of the subprime loan in USA. Many banks make loans for buying house. A lot of people got the loan. Because they were told by banks that the price of house is growing up, then they could get money to sell their house after that. But in reality they can’t pay back their loan and went bankrupt. And the price of house is decreasing. Banks got their house in mortgage, but the price is lower at this time. A lot of banks lost money.

In addition, financial companies bought these loans’ rights, and they sold these as claimable assets. This is a strange for me. I can’t understand enough what they did and why they can do it. Anyway, they have done it and these assets have gone down the drain. An insurance company for them additionally broke down.

Maybe these will influence our global economics. Some politicians say that markets naturally make our economics to be good. But nowadays we need to control our economy. I think we should consider about the balance of freedom and controlling of market economy.

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