The subprime crisis why did it happen?

   The subprime crisis has been quite a long time, people generally say that is because some people with poor credit histories, after receiving the loan, due to falling house prices, lead to large arrears owing on the loan, which triggered the sub-prime crisis. From the phenomenon, this is correct, but, what is this phenomenon causes? Historically, in 1998, America had occurred in the subprime crisis, the Federal Reserve Chairman Greenspan firmly expressed a signal: the Fed will take all means to save. When the subprime mortgage crisis, which lasted several months, a group engaged in subprime lending institutions, left, with the rest of the body, to make money. Why after nearly 10 years, more massive subprime crisis from happening again?
   The so-called subprime loans is American according to different credit rating classification results after. American financial institutions will every adult's credit rating by the score to assess, 660 more points for good borrowers, 620 points above the standard borrowers, 620-500 points in between, which belongs to the subprime lenders, below 500 points are completely unqualified borrowers. Evaluation method of personal credit credit by the company are collected, and then sold to financial institutions. For the time being collected, finishing method credit company whether, in subprime lender 620-500 between, popular is the credit has defects, or no credit record, for example, have been in arrears repayment records, had unemployment, had a criminal record. From the social structure, the number of subprime lenders is that most people. For financial institutions, is unlikely to give up this market. However, due to poor credit ratings, financial institutions loans to these people, will add some conditions, such as required to provide proof of income, or the necessary amount of the first payment etc.. By the way, a high credit rating, generally do not provide proof of income, but most of them can enjoy zero shoufu.
   The above said, in subprime loans in the process of mass distribution,A number of brokers are helping subprime borrowers counterfeit credit recordIn order to obtain loans, bank loans, financial institutions or companies to prevent lax, but also for increasing the fundamental requirement of traffic. Besides, financial institutions will be mortgages listed, one batch to be big, the listed conditions and general merchandise almost, scale is one of the important advantages listed. Of course, financial institutions will be the securitization market, there is a premise that, ideally, the borrower to pay the principal and interest Everfount, does not happen by accident. Of course, where it would not get interest from, since the provisions of the contract, it is not be changed. Although somebody will default, but, in the normal state, the collateral, and high profits, the default phenomenon is strong enough to withstand the normal range. For financial institutions, regardless of the borrower to pay the principal and interest of the money how to obtain, in this premise, to establish a set of rules of the game is the game of money, money and money, big money game world, is built on the borrower will abide by the basic agreement on the payment of principal and interest.
   The money game is a mutual entanglement guarantee chain: the value of securities pay regular by the borrower interest as guarantee, payment of principal and interest by the housing and other physical security, housing prices rose by value must guarantee, prices will rise by economic growth and inflation as a security, economic growth and inflation by the financial system itself as collateral. At the same time, economic growth and moderate inflation will ensure that personal income growth, thus guaranteeing the payment of principal and interest of the borrower to abide by the contract. This is a perfect chain, phase transition. However, people only realized it could one, seldom thought about it all, any link problems, the chain will be broken.
   Problems of the link from the first chain itself. Many of the causes of rising prices, a result which is, prices rising faster than income increases, cause a lot of income is not too high people anxious to purchase, at the same time, causing them to supply more interest monthly payment, resulting in greater pressure on their lives and personal financial situation. If prices keep rising, when faced with the huge financial pressure, but also will house up. However, prices have been rising is not possible.
   The external part in question from the chain. Subprime loans are large-scale distribution, an important reason is that the Fed's long-term take low interest policy. Greenspan's tenure at the Fed cut interest rates make borrowing period, low cost, naturally led to a large number of repayment ability is limited, have loan. Although the Fed later changed the reducing the interest rate policy, however, the subprime crisis occurred, the Fed cut interest rates again using the means of. Many economists, cut interest rates as the culprit of the subprime crisis, the subprime crisis is of little use to solve the. So, the Fed does not know will cut interest rates led to the sub-prime mortgage risk? Of course I know, however, because of greater financial goals, the lesser of two evils, the Fed think the credit risk in achieving greater target from the background, can withstand, can digest.
    The larger goal is the depreciation of the dollar. America too much debt, the depreciation of the dollar is forced to take rogue means. Although the dollar is mainly aimed at the international economic environment, however, the depreciation of the dollar back to induce greater risk. For example, the depreciation of the dollar caused oil prices, Americans' daily consumption costs increase, the increase in subprime lenders, greater pressure. For instance, in the premise of the depreciation of the dollar, American strongly urged revaluation of the RMB, for ordinary Americans, also do more harm than good: Chinese manufacturing consumer goods no longer cheap, Americans living costs increase, increasing risk of subprime loans.
   The Fed's low interest rates caused by the flood of liquidity, a large number of dollars into the market, stimulate the bubble growth America economy. Growth in order to realize, must will flow of dollars abroad, with high profits into the USA. In this way USA government is, give up profit manufacturing low, great value to seize the high-tech products, additional, huge profits the arms trade, high return of intellectual property rights, as well as hot money out around in the low interest policy, such as the Asian financial crisis, America will flow to the Asian dollar looting USA back. In the normal state of the America this economic means, wantonly money also is giant, but not the majority of the people.
   American this money problems in recent years: in recent years, high-tech products or encounter American monopoly charges, or market poor performance, or have lost a few years ago the growth momentum (Bill Gates lost the richest man in the world status is a sign), or due to American himself, to limit foreign sales...... Results in income, as before; America many intellectual property products do not have much real knowledge value, such as entertainment products, therefore, the difference and the gap, the price performance ratio of culture, so the non intellectual property products Americans would not American expensive; USA recent arms trade effect is not large, before the money is American arms incite others to play, he sells arms. In recent years, this approach is very difficult, including sells arms to Taiwan and also difficulties,American to do things sloppily in Taiwan buy arms issues very angry; moreover, after Iraq war in Iraq, USA planned to make one vote, only to lose about 600000000000 of the military, but has not come to an end. As for the Japanese financial war, the Asian financial crisis of plunder, as other countries have started the necessary precautions, it is not great; more importantly, the weak dollar policy on the one hand encounters the world of resistance, but also make the simultaneous depreciation America earned money, real value as it seems.
   America profit manufacturing low transfer to foreign countries, leading to a serious consequences: the average American employment difficulties, the unemployment rate increase, coupled with the depreciation of the dollar caused the price of ordinary people's lives, increasing pressure. Once the money to pay the loan principal source of money people began to reduce the effluent, the financial market will face the huge threat from inside. The George W. Bush government's approach is a tax rebate, let USA people to share in the international market. However, the tax rebate amount is not high. The $700000000000 rescue plan yesterday passed, which again contains rebate scheme about 140000000000. However, in the absence of expanding employment state, tax rebate only temporary solutions thirst. American is a consumer oriented country, on the whole, America people belonging to the zero savings. Massive tax rebate per person, for the slave, you are only one or two months for the month. Moreover, low cost loans led to a large number of zero shoufu. In the time of falling house prices, zero Shoufu house off for money, for people with less loss of the previous month, for, when is the rent. Thus, the tax rebate will stop due to the overall income relative degradation caused by breach of contract, the financial chain fracture occurred. While reducing the overall USA financial capital income is not enough to digest the subprime default loss, two converging attack, resulting in the subprime crisis. Sparks of fire, burning to seriously flawed financial system, default to car loans, credit cards, the crowd is beyond subprime borrowers, universal credit default; American finance and the world are closely related, expands to the whole world, triggered global financial turmoil.
   American Congress finally passed the rescue plan, the market does not buy America. President George W. Bush also with great care to say: save the market to a long time to see the results. A lot of people happy, including many Chinese, if saved USA is saved Chinese yourself. The mood is understandable, because many sectors of the economy, Chinese has American inseparable. However, the $700000000000 bailout even if successful, also won't last very long time. According to Buffett's words, America economy is in a "cardiac arrest" state, "in my adult life, I've never seen people like this feel so afraid of the economy, they did not worry about the wrong". Therefore, if USA financial system does not change, rescue success, but from this time. If you change the America financial system, Americans will lose the underworld eldest child's status, lose their paradise. Unless they decide to start fighting, to the world public robbery, in that case, America end will be more quickly, thoroughly.