The reason for the mortgage crisis in the United States and who made money on it. Actions to overcome the crisis

Causes of the 2008 World Economic Crisis

World economic crisis 2008 Is a recession in the global economy that began with the crisis in the US financial sector in 2007-2008. This recession is a long-term event that began in 2008 and has not ended until now. The emergence of the crisis is associated with a general cyclicality economic development, imbalances in international trade and capital flows, as well as overheating of the credit market and especially the resulting mortgage crisis.

The economic crisis in the United States has been developing for decades. The very theory of capitalism is that the amount of demand (in money) is constantly catching up with the amount of supply, and the amount of supply is constantly growing due to scientific and technological progress. And in order to recoup this same STP, you need to give money to consumers, which is what the Federal Reserve System has been doing for the past 30 years, increasing the emission of dollars. The emission ranges from $ 100 billion to $ 200 billion per month. In the 70s, a crisis of overproduction began in America - it was necessary to put all products and services somewhere. The dollar was defaulted and the Fed said that more dollar not provided with gold, as a result of which their unlimited stamping began.

The main and only causeworld economic crisis is the overproduction of the main world currency - the US dollar. It was from 1971, when the dollar was removed from the gold content provided by the US gold reserve, that dollars began to be printed in unlimited quantities. The purchasing power of the dollar was provided not only by the GDP of the United States (as it happens in every normal country), but also GDP of countries all over the world. Everything would be fine, but those states, whose economies began to provide the strength of the dollar, never had and do not have control over the volume of emission of the dollar. The US government does not really have this control either. Only the US Federal Reserve has this right.

The US Federal Reserve (in other words, the US Central Bank) is a private organization owned by 20 private US banks. It is their main business - to print world money. From 1971 to 2008, the volume of the dollar supply in the world increased tenfold, exceeding many times the real volume of the world commodity supply. This state of affairs was extremely beneficial, first of all, to the owners of the FRS as a private organization, and secondly to the US itself as a state. Significant funds were spent on providing “affordable” loans - consumer loans, including housing. Those. you have not earned anything yet, but you have already been given a house, a car, etc. True, under the obligation to work to pay off the loan for 30 years. It was possible to pay for all this (to issue huge volumes of loans) only through the unsecured emission of the dollar. At the same time, the owners of the FRS knew very well that they would not have to return this money to the consumer in full, because the stage of "controlled collapse" will come and everything will change, including the collapse of the dollar. This process has already been launched.

So, the overproduction of the dollar is the main cause of the global financial crisis 2008 r.

Next reason is the bursting bubble of unsecured mortgages. In the United States, population demand for housing grew from 2001 to 2005, fueled by so-called real estate growth. Higher prices are always accompanied by increased demand. Buying an apartment during a period of rising prices, people thereby increase the capitalization of their money. So, during this period in the United States began to actively issue loans "subprime", that is, in translation - "unreliable". They reduce the requirements for a person taking a loan, reasonably and at the same time naively believing that even if he cannot repay the debt on time, the apartment can be withdrawn, sold and earned on higher prices. Countless organizations have appeared on the market offering similar loans. Of course, this, to a large extent, can be explained by the banal desire of people for easy money. And then the following happened: the market grew, saturated, and the next generation no longer wanted to buy housing at the stated price. Of course, the market economy reacted as it should - prices immediately began to fall.

The mortgage of the loan is the real estate itself, but its final cost at the time of sale turns out to be significantly lower than the amount of the original loan. A person who received a subprime loan cannot give it back, the company that provided the loan takes the house, but its market value turns out to be two times less than the loan amount. In a single case, it would not matter, but the American market is huge, and therefore panic began. In America, mortgages began to be issued to everyone, secured and unsecured. In addition, the US economy (and with it the economies of other countries) received a strong distortion - one of the sectors strongly prevailed over others (real estate), and gave much less to the state. For example, if 100 rubles came to the sector of the economy, then it should give back in real value, at least the same. And such sectors did not give all real value into the economy. It was the New Economy of the United States that collapsed in 2000.

Prepared by a 1st year student of group 7

specialties World EconomyAvin Ivan

The world economic crisis is a phenomenon characterized by a sharp deterioration in all financial indicators. A similar condition economic sector shook the whole world in 2008. The scale of the crisis is comparable only to the times of the Great Depression. For the first time in the past seventy years, the value of the gross domestic product has reached a negative value. Some people still feel the consequences of this phenomenon, although not so sharply. This article will provide an analysis of the 2008 crisis - why it originated and how the world community felt its impact.

The inception of the crisis

Economic crisis did not start suddenly. Why did the sharp deterioration of the economy take place precisely in 2008? The crisis began to give its first signals two years before it swept across the world. It all started with the fact that in the United States there was a problem with non-payment of mortgage loans. In this regard, there was a destabilization of the real estate market. There was a drop in the number of home sales. A year later, similar processes in the United States formed a whole crisis of high-risk mortgage loans... He has reached a serious level of development. This manifested itself in the emergence of problems even for reliable borrowers. Such destructive processes were transformed into the 2008 financial crisis in the United States.

Growth in scope

But for a very short time the crisis was within the boundaries of this state. The crisis phenomena quickly spread throughout the world. It came as a shock to many that even major players banking sector were forced to declare bankruptcy. From such an end, some financial institutions rescued national governments. Over the next two years, there was a decrease in quotations on the stock markets. Many companies, evaluating the placement of their valuable papers, understood that raising capital would not always be possible. These processes clearly characterize world economy 2008.

The crisis also affected the manufacturing sector. In this sector, it manifested itself in a decrease in production volumes, a decrease in demand for goods and raw materials. This, of course, led to a drop in the need for labor resources... Due to the crisis, many people lost their job to lay off.

Overproduction of the dollar

Some experts single out one the main reason economic destabilization in 2008. The crisis, in their opinion, was formed as a result of the overproduction of the US dollar. The situation has grown to enormous proportions because the dollar is the world's currency. Until the seventy-first year of the twentieth century, the dollar was backed by the gold reserves of the United States. After a similar relationship between the currency and precious metal ceased to exist, the dollar was no longer printed in unlimited quantities.

The reason for the massive nature of the crisis is also that purchasing power The national American currency is provided not only by the gross domestic product of the United States itself, but also by a similar indicator of other states. But even if the financial sector of a power is directly dependent on the dollar, the country has no influence on the volume of currency emission. Even the US government itself has no control over this process. The only entity that has this right is the US Federal Reserve. This organization is also called the Central Bank of the United States. It is a collection of twenty private banks. They are united by one area of ​​activity, which is printing dollars. After the connection between currency and gold was interrupted, there was an increase in the volume of the mass of world money. It exceeded the volume of the actual commodity mass in the world many times. This situation was a good plus for two subjects - the heads of the structural elements of the US Federal Reserve System and the states themselves.

A huge amount of finance was spent on issuing loans at reduced requirements for borrowers. Typically, the purpose of these loans was to purchase real estate. Such an offer was very attractive to people, as it provided a lot of opportunities with a minimum wage. The only obligation was to work to pay off, and the loan term stretched for thirty years. It was possible to pay for such a program only through the unsecured emission of the dollar. central bank The United States anticipated in advance that not all funds would be refunded. It can be concluded that the government consciously carried out this process, knowing that at some point the dollar would collapse. That is, the overproduction of the world currency is one of the reasons that the global crisis of 2008 was formed.

Unsecured mortgage

In many ways, the reasons for the 2008 crisis are due to the explosion in the field of unsecured mortgages. In part, the bankers played on the feelings and nature of people. Everyone strives to have a roof over their heads, for some it is even a cherished dream. However, not everyone is so responsible - individuals are driven by a desire for profit and easy money.

Accordingly, in the period from 2001 to 2005, the demand in the real estate market grew. Housing prices have gradually increased. This led to the fact that people began to fear further growth in value. Many understood that they needed to take advantage of the moment before it was too late. This situation has led to the capitalization of money. This phenomenon contributed to the fact that a new proposal appeared in the banking sector. Financial institutions began to offer loans to residents of the United States, which were called subprime. Their Russian translation fully reflects the essence. It is the word “unreliability” that can be used to describe such a program. During that period, many organizations appeared that lured people with such loans without obligations. Financial institutions believed that if their client did not fulfill their obligations, then sanctions could be applied to him. The bank thought that in any case it would remain with its property by taking away and selling the apartments of the debtors.

Reduced requirements for borrowers

For many, 2008 was the turning point. The crisis was largely due to the mortgage collapse. It was caused by the so-called subprime loans. They were distinguished by their loyal customer requirements. This influenced the following events:

1. The growth of high-risk mortgage loans. Before the introduction of this program, he barely reached the bar of eight percent. In the two years since the appearance of “unreliable” loans, the number has tripled.
2. In the United States, more than one hundred and twenty percent loan coverage was considered the norm. At the same time, for example, for Russian Federation this figure was kept at the level of eighty percent. In comparison, we can say that the unprofitableness of this program for financial institution... The bank will not be able to recover its finances, especially in the event of inflationary processes.
3. Loyal requirements for borrowers were expressed in the possibility of a lack of credit history.
4. During the crisis, the total number of such loans was a quarter of the total. In some regions, this figure reached forty percent.
5. Financial institutions were so passionate about the implementation of such programs that the competition in this line was incredible. It even exceeded the competition for classical types of loans.
6. The most popular type of such a loan was loans, the hallmark of which was a floating rate. Its value was influenced by the LIBOR value. V set time the client had to return the borrowed funds in the form of interest to the financial institution.
7. A situation was formed, which was characterized by the receipt of such loans for housing by individuals with the aim of further resale of real estate. These people were not even going to return the loan funds.

Destabilizing the currency

In addition to the above-mentioned main reasons for the formation of the global economic crisis, there are also accompanying factors. They had a catalytic effect, that is, they further exacerbated the existing situation. One of these processes was violations and inconsistencies in international trade and capital flows.

The instability of the American currency also played a role in the emergence of the crisis. The persistent opinion about the indispensability of the dollar was refuted. Since in the pre-crisis period there was a devaluation of world money, in some countries there were attempts to switch to other currencies. The escape from the influence of the dollar has led to a deterioration in the position of certain sectors of the financial sector of the United States.

Rising raw material prices

A separate point is the increase in prices for raw materials during the crisis. This was especially true energy industry, in particular oil. This is due to inflationary processes caused by credit expansion.

The second reason for the rise in commodity prices was a manipulative financial mechanism. It represented investments by banks not in the real sectors of the economy, but in commodity exchanges. Investment funds, thanks to their huge borrowed money, got the opportunity to influence prices.

Cyclic processes

Also, the 2008 financial crisis was caused by cyclical processes of economic development. As in the previous case, this phenomenon was caused by credit expansion. This concept is characterized by the possibility of issuing funds from accounts on demand as a loan. This violates the rules of law that enshrine the impossibility of using things in storage. Development was always carried out according to the same scheme. Credit expansion started, then it reached its peak and finally collapsed.

Crisis phenomena in the Russian Federation

The 2008 crisis in Russia was marked not only by external factors, but also by internal factors. Special blow to Russian economy caused the destabilization of oil and metal prices. Total liquidity money supply the country fell sharply, which also affected the general state of finances in the country.

The signal of the impending crisis was the emptying of bank vaults. Financial institutions began to give loans to people, while they themselves borrowed funds from foreign partners. In addition, the supply has become much lower than the demand for credit. However, soon the implementation of this scheme was also suspended due to the fact that the crisis also affected foreign countries. The secondary reason was the fall in stocks.

Consequences of the crisis in Russia

The consequences of the 2008 crisis manifested themselves in the complete ruin of the state's banking system. This is clearly shown by the fact that financial institutions have stopped providing lending services. All this had a detrimental effect on the quality and standard of living of the population. The problem will not be solved until the phenomenon of the liquidity of the national currency disappears.

One of the reasons for the crisis, which the country itself aggravated, was the decision of the Central Bank of Russia to increase interest rate... This immediately had a dramatic negative impact on production volumes. Many businesses were forced to simply close down and declare bankruptcy.

The collapse of the stock exchange did not significantly affect the financial position of the country. This is due to the fact that the Russian sectors of the economy have practically no connections with the stock market.

The aftermath of the Great Recession

The way out of the 2008 crisis influenced the formation of a new way of the world economy. The economy has become more orderly and even. The plus was that the value of labor in industrialized countries increased, and accordingly monetary reward too. The economic recovery was noted in developing countries. They got a unique opportunity to compete with other major players on the world stage. After the 2008 crisis, it was especially easy for those states that did not depend on stock exchanges and the world currency rate. During this period, they directed all their efforts to the development of internal potential.

The rise of the industrial sector began to be observed. The governments of many states have revised directions of activity and priorities in domestic and foreign policy. Now the economy began to be treated more responsibly, new approaches were applied. Since the financial sphere of some powers found itself without material support from outside, the authorities were forced to mobilize their own domestic resources. For many states, such a financial extreme situation only gave an impetus for further development, since the authorities had to invest budget funds in domestic industries, which, of course, was only beneficial in the long run. The result of such situations was an improvement in the quality of life of the population and the independence of the economy.

The world economic crisis of 2008 - the global fall of the world economic indicators, which began after the crisis of the real estate market and related securities in the United States. The consequences are still being felt, despite the massive government support financial system in the US and Europe.

The world economic crisis of 2008 is a decline in the economy that began in 2008, the consequences of which have not been fully overcome until now. The beginning is considered to be the crisis in the US mortgage and stock market, comparable in scale to the Great Depression of the 1930s. By 2009, the volume of world GDP for the first time since the end of World War II showed a negative value.

Most financiers and politicians predicted the end of the crisis by 2009-2010, but as statistics show, its consequences continue to affect the world economy. In early 2016, ECB President Mario Draghi and IMF Managing Director Christine Lagarte almost simultaneously in their forecasts noted low investment growth even with zero interest rates of central banks, high unemployment and a decline in living standards. All these factors indicate the continuation of the period of the global recession.

US mortgage crisis

It is the fall of the real estate market in and related securities that is considered to be the "start" of the global financial crisis. Two factors led to the disastrous result:

1. Decrease in requirements for borrowers

In the United States, for a long time, the volume of mortgage loans with a high degree of risk did not exceed 8%, but from 2004 to 2006 it grew to 20% (and even higher in some regions). The growth was due to the following reasons:

• In the United States, loans usually cover 120-130% of the value of real estate, while, for example, in Russia, the borrower can count on a maximum of 80-85%. For a bank, such a loan is initially unprofitable: in the event of alienation, it is almost impossible to return the full amount, especially when inflation rises.
• Providing loans to borrowers with a short credit history or without it at all. Such loans are called subprime, and their share in the total amount of unpaid obligations by 2008 was 25% of the total, and in California and Florida - up to 40%. Competition between banks resulted in subprime conditions being much more favorable than conventional loans from state mortgage agencies. The most common: loans with a floating rate, depending on the LIBOR value and with payment only of interest during a certain period.
• The constant rise in real estate prices and the ease of obtaining a loan have created a situation when the borrower considers real estate exclusively as an object for further resale or prolongation of the loan for large amount for your own benefit. In this case, the repayment procedure is not considered at all.

2. Speculation with mortgage-backed securities

The classical model assumes that the bank provides a loan and bears all associated risks. In the early 80s of the last century, a securization procedure was developed - combining several loans with low level risk into one derivative security (derivative) for sale to investors. The idea was originally used only by government agencies that provide guarantees to investors in the event of default on mortgage loans.

At the end of the 90s, private banks, which had large volumes of loans issued, began to carry out securization. At that time, the specifics of American law did not provide for strict control for private companies and the most popular new derivative was secured mortgage debentures(CDO), which were rated as low risk by the leading rating agencies S&P 500 and Moody's.

CDOs quickly became a popular speculation tool, and constant growth quotations required constant new issues. CDOs emerged, which were based on high-risk mortgages, but even such "junk" securities were in great demand and the holdings of the largest investment banks such as Merrill Lynch amounted to billions of dollars. As it turned out in the course of a subsequent investigation by the FBI and the Securities Commission, credit agencies gave high ratings to the notoriously unprofitable CDO packages.

The rise in prices and the number of subprime loans naturally led to an increase in the volume of non-payments, which by 2008 came to a critical level and the stock market could no longer support the artificially inflated CDO rate. The 2008 crisis has started.

Decline in oil prices

In April 2008, the all-time high of the oil price was reached at $ 147 / bbl. In parallel, there was an increase in the price of gold - the most far-sighted investors have already begun to understand that this will be followed by a sharp decline. The price of a barrel fell to $ 61 in October, and dropped another $ 10 in November. The main reason for the decline was the decline in US consumption due to the mortgage crisis.

Development of the crisis

US President Ronald Reagan's campaign slogan was to cut taxes, especially for wealthy Americans, while maintaining spending levels, which, according to his team, should have spurred investment and economic activity. The following presidents George W. Bush and Bill Clinton continued this policy which ultimately caused the opposite effect. The greatest growth was observed outside the industrial and service sectors, and by the beginning of the crisis, financial institutions and the real estate market accounted for the largest investments and profits, which inevitably led to the effect of a “bursting bubble”.

After the adoption on October 3, 2008 by the US Congress of the plan of measures to overcome the crisis, proposed by the Secretary of the Treasury Henry Paulson, the stock market began to crash: the American stock index S & P500 lost 30%, the industrial Dow Jones fell by 11.08%.

In contrast to 2000-2002, when the stock market was shocked by the massive bankruptcy of overvalued IT companies, the current downturn extended beyond the United States and took on a global character, affecting the foreign exchange and commodity markets.

Bankruptcy of American investment banks

The top five US banks operating in the mortgage lending, went bankrupt or ceased activities in their previous form:

• Bear stearns... The fifth largest and the first bankrupt to lose almost all of its depositors' money as a result of its hedge funds, refinanced by the US Federal Reserve and JPMorgan Chase, which caused stocks to plunge 47% and panic in the market.
• Lehman brothers... The largest US bank with more than a century of history was forced to declare bankruptcy after the inability to pay customers a credit swap (insurance) on depreciated mortgage derivatives.
• Merrill lynch... Bank with the most developed network financial advisors and one of the largest packages of “distressed” mortgage-backed securities. Purchased by Bank of America;
• Goldman sachsandMorgan stanley... They survived in exchange for covering losses with the Fed's funds and the termination of investment activities.

The problems affected not only the banking sector - the largest mortgage agencies Fannie Mae and Freddie Mae came under control Federal agency in US housing finance, second largest Insurance Company AIG was restructured thanks to government loans.

Actions to overcome the crisis

The most drastic measures were taken in the United States, as the most affected by the crisis. Only the first tranche of the Fed to stabilize the financial system amounted to $ 250 billion in exchange for the partial nationalization of banks and companies; by December 2010, the total amount of injections into the economy amounted to almost $ 1 trillion. Among the world events after the onset of the 2008 crisis, we will briefly highlight the following:

• Simultaneous reduction of interest rates on October 8 by leading central banks, with the exception of the Bank of Russia and the Central Bank of Japan. This decision was seen as recognition of the global nature of the crisis. The next day, interest rates were cut in South Korea, Taiwan and Hong Kong. On December 4, the ECB and the Bank of England made a second cut to prevent deflation.
• The guarantees of the ECB, the Bank of England and the Central Bank of Switzerland to provide the US Federal Reserve with the necessary dollar collateral for currency swap agreements, which made it possible to maintain the liquidity of international settlements.
• Two G20 summits on November 14, 2008 and April 2, 2009 made the necessary decisions on reform international finance institutions, limiting protectionist measures, significantly increasing resources The World Bank and the IMF.

Consequences of the crisis

According to the Washington Institute of International Finance, for the period 2007 - the first half of 2008, the losses of the world banking system amounted to about $ 390 billion, and more than half of them are in the Eurozone. The capitalization of American companies fell by an average of 30-40%, European ones by 40-50%. The volume of world trade decreased by 10%, which has not yet recovered to pre-crisis values.

Measures to mitigate the consequences of the crisis in the form of reducing the costs of the participating countries and tightening the rules for interbank lending were taken by the ECB with a significant delay. This did not prevent the fall of the Eurozone economy, which constituted 30% of the world economy as of 2005-2009. industrial production was 11.5% - a record since the introduction of pan-European statistics in 1986.

2008 economic crisis in Russia

The first crisis phenomena in the Russian economy appeared in February 2008, when the Bank of Russia recognized the existence of liquidity problems. The current economic situation was characterized by a large volume of external corporate borrowing against the background of a decrease in public debt and an increase in the gold and foreign exchange reserve to the third in the world.

The growth of investment and lending, which began after the 1998 crisis, continued, and this, according to the Ministry of Finance of the Russian Federation and the IMF, led to the "overheating" of the economy, and by April 2008 already. inflation growth was 14%.

Among the external causes of the 2008 crisis in Russia, two main ones can be distinguished:

• Long-term increase in the LIBOR interest rate in the United States in the period 2002-2008 against the background of the depreciating dollar, which has ceased to be a stable reserve currency. This caused a massive transfer of dollar-denominated assets to other currencies such as Japanese yen, real estate and gold.
• Problems in the foreign policy of the Russian Federation: disagreements with Europe over the activities of joint energy companies and an ambiguous reaction to the August Georgian-Ossetian conflict. Bottom line - churn foreign capital and a drop in gas and oil exports.

Decline in stock prices Russian companies began in May, but the starting point of the 2008 crisis is considered to be September 16, when the RTS and MICEX quotes and indices collapsed, as a reaction to the events of September 15 in the United States. Trading was suspended, and despite the rise in stocks and indices in the following days, the market went into a state of complete uncertainty.

Bank bankruptcies began, followed by massive layoffs. A number of banks were bought out by government agencies such as Russian Railways and Gazprom, but problems in the banking sector forced the Central Bank to cover the losses of banks at the expense of gold and foreign exchange reserves in total amount about $ 100 billion

Anti-crisis measures

The first anti-crisis measures were announced by the Russian government in September-October 2008 and included two areas:

1. Strengthening the financial system:

• restraining the fall in the ruble exchange rate, which cost the budget a quarter of its gold and foreign exchange reserves;
• repayment of external debts and recapitalization of systemic banks. Expenditures exceeded 3% of GDP, but, according to the World Bank, this is what allowed to keep banking system stable in the face of an extreme liquidity shortage, prevent panic among depositors and resume the consolidation of the banking sector.

2. Financial support for large enterprises

First of all, the backbone and key for the country: Gazprom, Rosneft, Russian Railways and others. In total, assistance was provided to 295 companies.

Outcomes

The Russian Federation ended the crisis year 2008 with a drop in GDP of 10.3%, which was the largest in the previous ten years. But by the end of 2009, the Russian stock market showed a record growth and practically won back the previous fall. In general, the losses turned out to be significantly lower than predicted and, according to foreign experts, primarily due to timely anti-crisis measures.

The 2007-2008 financial crisis is a financial crisis that manifested itself in 2007-2008 in the form of a mortgage crisis, bank failures and falling stock prices, which became the first stage of the 2008-2012 global economic crisis (sometimes called the “great recession”).

The initial stage of the global financial and economic crisis was the mortgage crisis in the United States, the first signs of which appeared in 2006 in the form of a decrease in the number of home sales, and by the spring of 2007 escalated into a crisis of high-risk mortgage loans (English subprime lending). Reliable borrowers also felt problems with lending quite quickly. In the summer of 2007, the mortgage crisis began to develop into a financial crisis and affect not only the United States. Bankruptcies of large banks began, banks were rescued by national governments. The bankruptcy of Lehman Brothers on September 15, 2008 is especially distinguished. Stock market prices declined sharply during 2008 and early 2009. Opportunities for companies to receive capital when placing securities have been significantly reduced. In 2008, the crisis took on a global character and began to manifest itself in a widespread decline in production volumes, a decrease in demand and prices for raw materials, and an increase in unemployment.

2007 US mortgage crisis

The immediate precursor to the general financial and banking crisis in the United States was the 2007 subprime mortgage crisis, that is, mortgages for people with low incomes and bad credit history. From 2001 to 2005, the value of real estate directly owned by households increased by $ 10 trillion; during the crisis, Americans lost about $ 6 trillion of the value of their real estate.

George Soros, in Die Welt on October 14, 2008, defined the role of the "mortgage bubble" as "just a trigger that led to the bursting of a larger bubble."

Subsequently, the financial crisis in the United States became the detonator of the global crisis. According to analysts, American investment structures, facing problems in the domestic market, began to dump their foreign funds, which caused an outflow Money from new markets developing countries... As a result, the entire world began to suffer from the crisis in the United States. On January 13, 2010, a commission created by the US Congress to investigate the causes of the crisis began its work.

Financial market innovations

A significant factor in the emergence of the credit crisis in the United States, according to a number of experts, was the widespread use of derivatives since the early 1990s. financial instruments, derivatives and the desire to increase profitability by increasing risks. At the same time, there is no analysis that would show that it was derivatives that brought the crisis closer, and that the crisis in construction would not have occurred even earlier if derivatives did not contribute to the expansion of effective demand for real estate and expensive goods.

“In the US, economic growth was mainly observed outside real sector... On the eve of the crisis, up to 40% of corporate profits came from the financial sector, where everything was inflated, 40% of investments were in real estate - and all this was invested in the bubble. " Joseph Stiglitz, Vedomosti

Stock market crash

On October 31, 2007, many of the world's stock market indices peaked, after which they began to decline: from that day to October 3, 2008, when the US House of Representatives adopted Paulson's plan on a second try:

• the S&P 500 index fell by 30%;
• MSCI World index showing the dynamics of the markets developed countries, fell by 32.3%;
• MSCI Emerging Markets Index of Emerging Markets - by 40.5%.

In contrast to the previous collapse in 2000-2002, which was caused by the collapse of stock market technology companies and was limited to the US markets, the collapse of 2007-2008 affected all countries and was caused by events outside the stock market - a boom and then a collapse in the credit and housing sectors, and later - in the commodity markets: shares of Western banks were the first to fall , and since July 2008, when oil prices began to fall rapidly, there have been shares of commodity companies in developing countries.

The banking week of October 6-10, 2008 brought the historically maximum drop in indices on the US trading floors: the Dow Jones Industrial Average fell to 7882.51 and closed at 8451.19. The Financial Times compared the Friday October 10, 2008 stock market crash with October 10, 1938: "In Friday morning trading, the S&P 500's decade decline was almost identical to its decade's decline on the same date in 1938."

The stock market crash in October 2008 was a record for the US market over the past 20 years, for the Japanese market - in the entire history.

The collapse of the largest US investment banks

Evening bustle near the Lehman Brothers headquarters building on September 15, 2008,
when the bank filed with a New York court for its own bankruptcy.

Summary table of bankruptcies of American banks

A crowd of waiting depositors outside a branch of Northern Rock Bank on September 15, 2007.
Clients withdrew savings from their accounts en masse.

In August 2007, Bear Stearns found itself in the middle of a mortgage crisis. At the time, it was the fifth largest US investment bank. As a result, the two hedge funds under his management lost almost all of their clients' money ($ 1.6 billion) on investments in mortgage bonds, which caused panic in the stock market. On March 14, 2008, the firm announced that it needed urgent funding to meet its repayment obligations due to the country's ongoing credit crunch. The US Federal Reserve and JPMorgan Chase have agreed to provide additional funding. Immediately after the news, the bank's shares fell 47%.

On September 15, 2008 the bank declared its bankruptcy Lehman brothers- one of the largest banks in the United States.
Deputy Head of the National Bank of Ukraine Savchenko A.V. noted that “Lehman Brothers ... was the strongest player in the credit default swap market. Having lost insurance on their investments, American investors in a hurry began to close positions in emerging markets and go into the dollar. "

The bankruptcy of Lehman Brothers led to doubts about the possibility of payments of insurance companies that insure against the risks of bankruptcy of the credited (CDS), which led to the crisis of the CDS instrument itself and a sharp increase in insurance risks, which resulted in a crisis of confidence between banks and a sharp increase in lending rates, which especially strongly affected in emerging credit markets, including Ukraine and Russia.

The LIBOR-OIS spread (showing the difference between the LIBOR rate and the futures on the official rate of the Central Bank - evidence of the availability of money on the interbank market) at the end of September 2008 exceeded 200 basis points for dollar loans, and at the beginning of October - 250.

“Five of the leading US investment banks have ceased to exist in their former capacity: Bear Stearns was resold, Lehman Brothers went bankrupt, Merrill Lynch was resold, Goldman Sachs and Morgan Stanley changed their signboards, ceased to be investment banks due to special risks and the need to obtain additional support from the Federal Reserve System. "

Economists' Opinions in 2008 on the Financial Crisis

On October 13, 2008, The Times wrote that a gradual departure from the unipolar global monetary system based on the dollar would follow in the world. Referring to the People's Daily, the newspaper cited the opinion of the Chinese economist Shi Jianxun, who called for "diversification of the monetary and financial system and a fair financial order that will not depend on the United States. "

American financier George Soros, in his Die Welt on October 14, 2008, predicted a relative weakening of the economy and the decline of the United States and the rise of China: “As we accumulated debt, they [the Chinese] saved and accumulated wealth. The Chinese will eventually own most of the world as they convert their dollar reserves and US holdings into real assets. This will change the balance of power. The shift in power to Asia will come as a result of America's sins over the past 25 years. ”

According to Francis Fukuyama (November 2008): “This is not the end of capitalism. I think this is the end of Reaganism. Reagan had several ideas, one of which was to cut taxes, but keep spending at the same level: it was believed that this would lead to economic growth. And it did, but it also gave rise to many problems. Another idea was deregulation, including deregulation financial markets... I think the likelihood that the United States will lose its position as a world economic leader is very small. "

Some Russian economists (Mikhail Khazin, Mikhail Leontyev) and film directors note that one of the options for overcoming economic crises is world war. Some of the economists suggest that the United States may be indirectly interested in unleashing a third world war, which will view a new world war as an effective way out of the global financial crisis of the late 2000s, according to the scenario that worked during the second world war as a way out of the state of the great depression. However, most economists (including Mikhail Khazin) believe that now the world war is not beneficial to anyone.

Turning the financial crisis into a global recession

Published on November 13, 2008, the Organization's economic overview economic cooperation and Development (OECD) stated that the developed economies of the world entered a recession. International rating Fitch agency Ratings believed the recession would be its worst since World War II and for the first time developed world enters into it synchronously.

Thus, the financial crisis of 2007-2008 turned out to be the first stage of the world economic crisis of 2008-2012.

Just the other day I was reviewing one of my favorite films about the 2008 crisis in the US "" and a logical question arose: could the emergence of a mortgage bubble in principle be avoided? And could such large-scale consequences have been prevented? Or are accidents not accidental? After all, before the mortgage crisis of 2008, there was an equally devastating "Dotcom Crash". And now, after 8 years, a new super-profitable asset appears -. Will there be a new collapse or will the situation not repeat itself? In this article, we'll talk about the causes of the 2008 crisis and whether it could have been avoided.

Causes of the 2008 mortgage crisis

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In the United States, a 2-tier mortgage lending system was implemented, in which not only banks, but also investors were involved - various funds(insurance, investment, etc.). The loans were issued according to the principle of securitization. Securitization - release financial institutions(in particular by banks) securities secured by collateral for homogeneous loans (loans with the same maturity, amount, customer reliability, etc. - parameters that determine the risks). In theory, the investor does not risk anything: his money will be returned either through the sale of the collateral, or through the repayment of the loan.

Financial (classical) securitization

Quite a complex and cumbersome system, with which the securitization mechanism initially began. And although the system was imperfect, there was a multiplication mechanism, which means that the economy continued to grow due to the demand for real estate.

The scheme of work is as follows:

1. The originator (the first link in the chain is the bank to which the potential borrower applies) forms a pool of assets (a portfolio of homogeneous loans) and writes them off the balance sheet.
2. The loan portfolio is transferred to the balance sheet of a separately established SPV company.
3. SPV issues securities (mortgages, notes, bonds) against the pledge of the received portfolio. The pledge pool is abbreviated as ABS. Followed by:

3.1. Portfolio quality check, risk assessment and rating assignment.

3.2. Sale of securities to an interested circle of investors.

3.3. Purchase of bonds by the originator (Junior notes - junior notes, claims on which are subject only after satisfaction of obligations for senior ones. Senior notes are owned by investors).

1. Investors pay for the purchase of ABS through intermediary banks.

4.1. The paying agent bank transfers the money from the ABS sale to the account of the SPV issuer, deducting the underwriting and maintenance fees.

1. The proceeds from the sale of ABS are transferred by SPV to the originator as payment for the purchased assets.
2. During the entire period of the agreement, the originator maintains the pool of assets, that is, receives income from them as well.

6.1. In some cases, during securitization, a separate participant is allocated to maintain the pool of assets (servicer).

1. The received income is transferred by the servicer or originator to the SPV.
2. The SPV, through the paying agent bank, pays off the interest on the loan and the main debt to the investors until the full repayment.

Synthetic securitization

Financial securitization is characterized by such problems as the difficulty in determining the tax base), the need to disclose the personal data of the borrower, and the high cost. Therefore, preference was given to synthetic securitization, in which the transfer of risks occurs due to surrogate securities without actual transfer loan portfolio... In other words, from a legal point of view, the asset is not sold, it remains on the bank's balance sheet, but the risks of the asset are transferred to investors. Moreover, the risk is transferred not for a separate asset, but for the formed portfolio.

CDS (Credit Default Swaps) and CLN (Credit Notes) are used as investment instruments. By the way, it was about swaps that was discussed in the film “The Shorting Game”, where the protagonist made a bet on the fall of the mortgage market.

The scheme of work is as follows (below you can see a description of each process):

1. Solvency analysis and registration loan agreement with borrowers.
2. Transfer of risk to the SPV using a negotiated credit default swap agreement.
3. Additional financing as credit support.
4. Risk assessment, obtaining a rating of surrogate securities issued for risk insurance.
5. Production and sale of synthetic instruments (mortgages, CDO) to interested buyers.
6. Transfer of money by investors for the securities received.
7. Purchase of government securities.
8. Transfer of money for government papers... The source of funds is the money received through the emission of CDOs.

9. Transfer to the originating bank of the acquired state securities as collateral.

1. Payment by borrowers of the body of the loan and the accrued interest.
2. Coupon accrual for state securities.
3. SPV transfer of coupon accruals for government securities and premium accrual for CDS (swaps).
4. Transfer of money by CDO.
5. Payment to the guarantor for credit support.
6. Payments with a rating agency for rating assignment services.
7. Crediting the balance of income to the originating bank.

The synthetic securitization system had a huge advantage, but it was it that caused the 2008 crisis. If during the classical securitization SPV was under strict control and its bankruptcy was virtually excluded, and the organization itself was interested in buying a high-quality pool of assets, then in a synthetic form everything went into the category of issuing surrogate securities.

Control over the entire system was entrusted to (although remember the situation with Enron, when all the ratings turned out to be fake). Despite such a compelling risk-sharing system, it collapsed with a stunning crash. The belief that loans would be repaid and the belief of investors that banks assess the solvency of customers was so strong that it was beyond question. Investors, confident in the yield of secondary securities, poured money into the banks. Banks with inflows of money encouraged borrowers to borrow, and borrowers, satisfied with the available lending, gladly took advantage of the banks' offer. Managers received bonuses, ignoring, and rating agencies did not ask questions about the reliability of borrowers at all.

At some point, borrowers were unable to service loans, and investors began to take money in a panic, which was not in the closed system. Real estate, which was growing in price until 2006 on the wave of demand, immediately fell in price and actually turned out to be of no use to anyone. The consequences of the bursting price and credit bubble are already known.

The US crisis was inevitable

Could the 2008 global crisis have been avoided? It seems to me that no. Let me turn to theory, recalling the economic waves that Tugan-Baranovsky and Kondratyev spoke about:

1984-1985 - recession in the USA, Canada, Western Europe, slowdown in the growth of the Japanese economy (1.3% GDP growth instead of 6-7% growth in the previous 20 years);

1991-1992 - another severe economic crisis in the United States and Western Europe. Economic growth in these countries resumed only in 1993, but this did not affect Japan;

2001-2002 - the consequences of the "dot-com", although economists believe that the causes of the crisis have much deeper roots. In those years, there was a decrease in investments in the US by 4 times and 2 times in the EU, the US GDP fell to 1.6% and to 1.1% in the EU. Unemployment increased and business activity declined.

It is easy to see that the global economic recession occurs on average once every 7-9 years. Therefore, many economists agreed that it was impossible to avoid the financial crisis of 2008, and the mortgage was just a catalyst.

A few thoughts on what is happening in the cryptocurrency market right now. It is believed that the sharp rise in cryptocurrency quotes is due to the fact that the community was able to come to a single agreement on policy. In particular, the Enterprise Ethereum Alliance was created in March, which was joined by 86 of the largest corporations in May. At the same time, a New York agreement was signed to launch from August with the activation of the BIP141 or BIP148 software and a hard fork. For the rest of August and September, cryptocurrencies will win back this event, and pessimists are already talking about a possible split.

The digression about cryptocurrencies is no coincidence. The existence of more than 800 cryptocurrencies suggests another bubble. And if we add to this that the US and European stock indices are almost at historic highs, then it might make sense to expect another economic downturn. And even though there was already a decline in early 2016, it is only local, because the wave global crises last 1-2 years, and recovery occurs only by the middle of the period, that is, at least in 2-3 years.

Conclusion... The economic crisis of 2008 will go down in history as the largest one because of the consequences to which it led. And it's not just a high-profile or structural mistake with mortgages. The point is that such a situation, in principle, was admitted. The 2008 crisis in Russia echoed the falling markets of the US and Europe. But due to somewhat different principles of building the economy (including the link to oil revenues), the economy of the Russian Federation did not receive such a blow as in the United States. True, this is also a minus. Suffice it to recall the 1997-1998 crisis that affected the ASEAN countries and Japan.

Should we expect a new economic downturn soon? And what will serve as its start if it does happen? I suggest discussing this issue in the comments!

Profit to everyone!