THE SUBPRIME MORTGAGES AND ITS EFFECTS ON THE FINANCIAL CRISIS

Summary: We're in one of the worst crisis since the Great Depression, with global repercussion. This crisis involves financial and real crisis. Financial markets have become bigger and financial crises also became deeper. In this article, I'm analyzing the most important factors which have affected our actual crisis, caused because of the housing bubble's crash.

Between 2000 and 2002, the US lived a Financial Crisis called the .com crisis, caused by the technological business' decrease. To solve the effects of this financial crisis, the Federal Reserve of US reduced the interest rates, which made everything cheaper. This reduction made house buying really attractive, because then it was really cheap to buy without high interest rates. So banks started to give lots of credits and housing also grew, what made houses price rise.

When banks saw that house prices would keep growing, they made easier for people to buy a house. This was due to the fact that if those people couldn't pay the house, they would sell it in the future for a bigger price. This kind of mortgage was called subprime mortgage or trash mortgage. So, this way, affordable credits for families and businesses grew a lot, making mortgages bigger. So, this way economic agents became indebted seriously.

To affront the great bills that companies and families had to pay, banks recurred to securitizing: The mortgages they'd sold became negotiable securities in interbank markets, known as the CDO's. These securities were backed with other mortgages, so if people didn't pay, they would lose a high part of their value.

This is the way how they made mortgages into securities:

1) The bank gives a mortgage loan.

2) Then, the bank sells this mortgage to a company depending on the risk they have, which is gauged by a Rating Agency.

3) Finally, this mortgage is sold to investors who don't know anything about them.

By the end of 2005, the interest rates had grown a 5%, so houses prices had grown a lot too. Because of this, banks started giving less loans. So this caused a decrease on the price of houses: the financial bubble had just exploded in 2006. Because of this, a big number of non-payments started to happen, and this provoked the financial sector to be mistrusted. This led to the decrease of the active CDO's. In 2007, all financial institutions were trying to sell their CDO's, what made CDO's prices decrease, and made US economy falter. Because of this, banks stopped giving loans, so houses' prices became even lower.

What started being a sectarian crisis (in financial and housing) became then a Real Crisis, affecting the other sectors. Which made US GDP decrease between 2008 and 2009 (see graph above).


 
By Noé Rodríguez Daporta

The discrimation of women in India

The discrimination of  women is a fact in many countries. If a girl is born in a family that´s a disaster, she will be underestimated and she won´t be treated as if she was a boy.  

For example, one of these countries is India. There, girls are discriminated since they are born; they can´t go to school, and they are educated in doing the housework and taking care of their brothers or sisters.
Indian girls are engaged since they are born, and they get married when they are just six or seven years old. Their husbands have total dominion over them, and in many cases they are treated worse than domestic animals. Since they are married, girls often get pregnant and have a lot of kids. That´s because their husbands just refuse to use contraceptives. Apart from taking care of their children and doing the housework, women are the ones that make the harder tasks.

 The biggest part of violence against women in India is constituted by violations, which is the cause of the death of over one or two million  women a year. But this is not the only way of violence: women are often burned alive; other big part die because of  aggresions from their husbands.  But the most horrible way of violence is that some fathers kill their girls when they are babies or kids, just to evade the big amount of money Indian people are used to pay to the husband´s fathers when they want to get their daughter married.

Violence against women in India is a big trouble in our society, and I think that our international organizations should do something about it. What do you think they should do? Would you choose to be an Indian woman?

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