The mortgage crisis and the world economy
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The world economy is threatened by what some believe is most dangerous crisis since the depression of the 1930s: the mortgage crisis in the U.S.
The world's economy is threatened by what some believe is most dangerous crisis since the depression of the 1930s: the mortgage crisis in the U.S. In this edition of "The Changing World," Michael Robinson looks at the deepening international financial turmoil.
On July 31, President Bush signed into law a major package of housing legislation -- the law is intended the curb the spiraling number of foreclosures, and to help keep hundreds of thousands of Americans from losing their homes. It gives the Treasury Department authority to help the nation's two largest mortgage finance companies -- the Federal National Mortgage Association, or Fannie Mae and Freddie Mac, which is the Federal Home Loan Mortgage Corporation. Together, Fannie Mae and Freddie Mac hold or guarantee loans valued at five trillion dollars -- that's about half the mortgages in the nation.
Fannie Mae was created during the Depression, to make sure that mortgage lenders had sufficient funds. It was re-chartered by Congress in 1968 as a publicly-traded company. Freddie Mac was created by Congress in 1970 -- it's goal was to expand the secondary market for mortgages in the U.S. Recently, both institutions have reported steep losses as the housing market faltered.
Critics of the new law say that it won't do enough to help struggling home owners, and that the measure raises the national debt ceiling by 800 billion dollars.
In this edition of "The Changing World," Michael Robinson looks at the deepening international financial turmoil. Robinson explores why other nations are keeping a watchful eye on our housing troubles, and what U.S. lawmakers -- and homeowners -- are doing to keep this crisis from getting worse.
A special collaboration between BBC World Service and PRI's "The World," "The Changing World" is a series of powerful documentaries, each of which takes a long look at a single global issue, from geo-political hegemony to world health concerns.
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Comments (1 posted):
Think of it that the US will encounter this kind of financial crisis. I believe this is the beginning of a worldwide hyperinflation, and heavy depression that will trigger the general weakening of currencies of various countries worldwide.
The heavy tool to human lives and properties worldwide mired by the climatic change is the great depressant to the growth of world economy. And we can expect some more, more, and more, as months and years go by.
Having been mired in a great quandary, the remaining currency reserves of various central banks of many countries will be greatly depleted in the swift keynesian actions to save their economies.Why so? Because, John Meynard Keynes' economic strategy of fund infusion to the internal economy can only prevail as valid if economic ills and weaknessess in the currency value of a country is too isolated and shortlived. But if such economic problems linger for my many months and years, then the Keynesian Model will no longer apply. My formula for this is " live within your means". Sive a simple life, and do away with heavy spending in various programs and projects that have very low ROIs and longer payback periods.
Huge budgets for armaments and real state budgets worldwide should be cut but about 70% by now. And instead, countries should concentrate in creating surplus food baskets and processed food products should be delivered to the 4th world countries and feed their greatly impoverized citizens.This is still paliative in focus. But at the back of that, the 4th to 5th world people should focus in food self sufficiency by accessing technologies and capital for the development and expansion of their agriculture. Where to get those capital and budgets for agriculture: Answer: from internal funds available- from government, donations and loans from rich people,AND BANKS.
iF YOU further needs my comments, please contact me through my email address.
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