Beginning of the crisis

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After Forbes the cuts implemented by the ECB last week, but now a new decision, crossing the Atlantic, has given the Federal Open Market Committee of the U.S. Federal Reserve that has shaken the markets, and tomorrow we will begin to analyze its impact . Decidio FED has cut interest rates by at least 75 basis points and the rate situa in a target range of between zero and 0.25%. Following this initiative, al reaches lowest level since the interest rate became the main tool of monetary policy of the U.S. central bank. Mr. Main article: Crisis of subprime mortgages
The trigger of the crisis seem to have been several. Among the economic factors seem to be the mortgage crisis began in August 2007 in the United States, which resulted in a credit contraction, and the gradual increase in the Euribor by the ECB, which generated an increase in mortgage fees, which Spain are 98% to a variable interest, which could have ended affecting consumption, and in any case, the consumer confidence. Moreover, the strangulation of the credit market would have left without financing to companies engaged in construction, taking many works in progress, would not have found via a credit due to the tightening of the refinancing, which aggravate the situation in an area with a high degree of leverage.
Among the structural factors, according to some, the speculation, oversupply and the exhaustion of demand, unable to bear the high prices of real estate, as well as the rigidity of the housing market, with difficulties in adapting quickly Quadrant Asset Management to changing market (since the start of a work and its sale can take up to two years).

Subprime mortgage crisis is one heck of a mess.(EDITOR’S NOTEBOOK)(management of subprime crises)(Editorial): An article from: San Diego Business Journal by Tom York (Digital – Jan 7, 2008)HTML

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