Who is to blame for the American financial crisis? by Corina Ciubotaru

Whenever something goes wrong, we humans tend to blame someone or something. If a flood hits, we blame God or global warming. If a road accident occurs, we blame the reckless driver. And if huge mortgages cause a financial crisis, we blame the credit rating agencies. These companies assign credit ratings for issuers of various debt obligations, in other words they assess the ability of companies, NGOs, governments etc to pay back loans. There are over 100 of them worldwide and some think they should have warned investors that the subprime mortgage market in the U.S. is heading for trouble. A subprime sector is one that shows high risk, as was the case with this one due to cheap credits and high prices on housing. Many were attracted to it and my guess is that the ever-growing number of immigrants who want the security of their own home in America played a big role. The main cause of this crisis is that people loaned money and couldn't afford to pay them back; they became "subprime borrowers" which would not be surprising given the small wages immigrants often get. Whatever the cause, the American economy is struggling to get out of this mess. The Federal Reserve keeps pumping billions of dollars into commercial banks, while central banks in other countries try to alleviate the problems they face collaterally. Everyone is confident the United States will leave this crisis behind soon but country leaders like Nicolas Sarkozy, the president of France and John Howard, Australia's Prime Minister, took the time to address the nation and try to calm down spooked investors.

related story: http://uk.news.yahoo.com/afp/20070816/twl-markets-finance-4bdc673_1.html

by Corina Ciubotaru for PocketNews (http://pocketnews.tv)

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