car rental italy was never so easy before the advent of http://www.121carhireitaly.com/. Introduction of this website has revolutionized the notion of searching most affordable car rental to a great extent and it has become almost a bandwagon for scores of people looking for rented cars. The reasons are not hard to see, leading and proficient features of the website have created the difference altogether.

Now, by means of a single click in the website, you can have a good knowledge of best and cheapest in small, luxury, prestige, 7 seater, and sports car rentals in seconds. Aside from this, the website’s professional relationship with reputed rent-a-car agencies across the nation that helps onlookers to have the best reasonable rate makes a major impact.

Even in case of

Car Hire Turin Airport you can get lots of help. It doesn’t matter where you go, the website can always arrange for you the best deals on car rental through making a precise comparison in the car rental market.

But Car Hire Alghero Airport is more exciting, without a shred of doubt. Here you can get bounteous supply of all and it hardly matters whether you wish for to have luxury, sports or any other larger car with greater comfort. Car rental in Sardinia is just like any other part of Italy. The website includes readily available info including airlines flying to Alghero, major self-drive agencies in its vicinity.

A lot of us have found ourselves in a situation where we need to get cash fast: that sudden bill, payments for medical treatment, repairs for your car. Thankfully, you can get an instant payday loan easily these days. As long as you are aware of the substantial costs that come with them, a cash advance loan is a viable solution to these emergency situations. As stated earlier, just be aware of the costs that come when getting a payday loan, mainly the high interest rate.

The digital age: providing instant connectivity and solutions

Commonly, people have found instant payday loan providers within their own neighborhoods and going up to them in person. However, in these days of increased connectivity via the World Wide Web or internet, cash advance loans can now be acquired electronically.

A lot of these lenders offer easy online application for loans and can inform instantly when your loan has been approved, after which the borrowed funds would then be deposited into your banking account the following business day. In most cases, loan providers require that you have a steady source of income through employment and that you are able to provide a banking account. Some may require you to fax the necessary details or have a digitized copy of the paperwork to be sent via e-mail.

Increasing your chances against losses

Just remember to do your research about cash-advance. First, carefully read all the agreements and be very sure that you can pay the borrowed money back in the time allotted to you. Inform yourself of the state’s laws and regulations regarding cash advance providers, and choose a lender who is able to abide with those laws and regulations. These kinds of loans often have interest rates on an annual percentage cost that could add up to as much as several hundred percent.

If you are not able to pay for them in a timely fashion, you would find yourself in a downward spiral of financial debt that may haunt you for a long time. A good tip for all loan applicants is to simply borrow what you immediately need.

Just to remind you once again

Again, this may sound repetitive and redundant but be aware that this is a financial matter and anything that involves money, always has its risks. Preparing for your cash-advance, its future costs and the steps you’ll need to pay on time will ultimately help you mitigating these risks.

It is also a very crucial key component to your loan application that you do you research about the cash advance provider. The Better Business Bureau, for instance, can provide you information about a lender regarding their customer relations and if they have any pending issues with a borrower.

Prior to registering your domain name, you initially contemplate of which is more significant, brand awareness or search engine rankings. It does not signify that when you center on brand awareness you will not achieve search engine rankings. However, that objective may take a while to accomplish, you will require a good web hosting provider with webhosting awards for this.

If the industry name is greatly profitable, you may want to heighten its popularity to your niche. Keep in mind that this is not an instantaneous endeavor. A dedicated server will assist you in attaining your goals. This would take months to years in attaining but the rewards are worthwhile.

Investing in property is still profitable but the property prices have risen sharply in recent years, you can turn to buying old apartments that require work to be done. The deductions so made will reduce taxation and subsidies.

The devices ‘Borloo “or” De Robien’ refer to recent or new apartments and cost close to those of the Livret A. For best performance, buy an apartment or an older building whose work you will consistent large deductions. Note however that the purchase price added to that work does not exceed the market price. Moreover, depending on the region you can get grants from the town or state. But always watch the local dynamism and quality of the site.

Borrowing to carry out the work may be appropriate and interesting because interest loans are also tax deductible. A well-constructed project can make a profit of close to 6%.

If your budget is not enough, remember the ANAH (National Agency for Housing Improvement) which grants up to 70% of the amount of work. In this case you will offer your tenants rents moderate or lower than the local market and over a period of 9 years.
Some regions of France offer more than others, so check with town halls in which you plan to invest. In all cases, ask the grants earlier this year to be sure your project succeeds.

Some cities organize OPAH France (Operation programmed habitat improvement), whose goal is to provide additional subsidies to investors, however, limited to 5% of that given by the ANAH. Also note that all grants shall not exceed 80% of the amount of work. This work will necessarily be made by professional firms and not by you.

You will not get rich quickly. Almost all investors are convinced they’ll strike a blow and a gush of fortune ticket in the blink of an eye. This is probably the worst strategy you can have for the optimist simply is not an investment strategy!
More than optimism, it also means greater claim to decrypt is that many scientists and researchers have still not found.
What you need is to develop an investment strategy that can work for you for a long time.

Do not be confused with a casino. Most investors do not know when to buy low and sell high. Yet the basis of trading but people continue to pursue investment strategies not only risky but without basis or merit. I will cite an example, an investor from Sunday, although the stock market is closed that day, which starts by buying an option with an exercise price higher over the course and a very short deadline. The chances that the strike price is reached and almost nil, given the maturity and given the market trend.

Today, a casual conversation on the commuter train, or perhaps with a co-worker or an acquaintance, more often than not voices our worries about a world in crisis. Our dialogue may start with the cost of commuting, the price of lunch, or the lack of better jobs, but inevitably leads us to bigger concerns–artificial preservatives, illness and disease, a declining economy, natural catastrophes, and global war. All too often, we find ourselves concluding these brief exchanges with, “What is this world coming to?”

Kabbalist tell us that there is only one purpose for all the crises we are experiencing in this world: It is to make us realize that we are out of balance with the general force of Nature, and that we have to restore our balance with it. In fact, everything else in Nature exists in perfect harmony, following the principle of love and reciprocity, and it is only the human ego that creates the imbalance in our world.

But Kabbalah also explains that the ego is our inborn nature, and we cannot simply eradicate it, no matter how hard we try. Hence, in order to bring about our vital balance with Nature, we only need to correct the way we use that ego. This means developing a different intention in everything we do–an intention of love and bestowal, which will make us balanced with Nature’s general, all-inclusive force.

Indeed, there is no better time to develop this intention and correct our use of egoism than today. In The Story of Stuff with Annie Leonard, we are presented with some startling statistics about current consumption rates in the U.S. and their effects on our lives. For example, the U.S. alone, which roughly accounts for 5% of the global population, has used up one-third of the world’s natural resources in the last thirty years. Moreover, with 51% of the largest world economies comprised of corporations, we are producing and pushing consumption as the highest value of human identity across the globe. But the question is: Is the world becoming any happier, more peaceful, or secure?

The fact is that it is not, and Kabbalah explains that this is only because of our human egoism, which is completely opposite to Nature’s law of reciprocal “bestowal.” Hence, by promoting our egoistic goals and intentions, we only deepen the global crisis and thus prolong our suffering.

Our experience shows that even when we develop methods of solving the crisis, they prove to be futile and the troubles only worsen. This is because eventually, we are bound to realize that we cannot affect a positive change as long as we remain within our present nature–the uncorrected human egoism.

Undoubtedly, our realization of a world in crisis is well at hand. But only when we become willing to adhere to Nature’s law of bestowal can we truly begin resolving the crisis. To do so, we must learn how to use our nature correctly–and that is what the wisdom Kabbalah is all about.

Ron Paul discusses the collapsing financial markets. “We’re in the middle of something very big and it doesn’t look like it’s going to end soon.” digg.com digg.com house.gov campaignforliberty.com http

It’s been a lot of time we hear of “Recession” going on in US market. Everyone is talking about recession. We cling to newspapers, television news channels, and financial reports only to discover “what next” in recession. Technically, recession means decline in GDP or Gross Domestic Product of a country for two consecutive quarters. Now, this explains recession only as a definition to remember. When we go more deep, we need to first understand the meaning of GDP. Gross Domestic Product is the value of all final goods and services produced in an economy in a given year. These final goods are those goods which are not transformed into other goods. These goods are evaluated as per their market value. It means when the value of all final goods and services produced in a given year declines for two consecutive quarters, the state is referred to as “recession”. It is visible in real GDP, real income, employment, industrial production, and wholesale-retail sales in an economy.

As per NBER (National Bureau of Economic Research), there have been ten recessions since 1945. From mid 1940s till 2007, the average recession lasted 10 months, while the average expansion lasted 57 months, giving us an average business cycle of 67 months or about 5 years and seven months. In this period, the shortest recession lasted only 6 months, from January to July 1980. The two longest recessions during this period lasted 16 months each, one extending from November 1973 to March 1975, and the other from July 1981 to November 1982. There was a noticeable decline in real GDP in both of these periods. The shortest expansion period from the mid-1940s until 2007 lasted only 24 months, from April 1958 to April 1960. The longest expansion continued from March 1991 to March 2001, setting a record of 120 consecutive months of growth. As luck would have it, United States has experienced only two relatively mild recessions and extended periods of expansion over the past 25 years.

There are various factors that flush an economy into the weird state of recession but Inflation is the main factor which contributes more towards the situation. Inflation is a condition of an economy when the prices of goods and services rise immensely over a period of time. The higher the rate of inflation, the smaller the percentage of goods and services that can be purchased with the same amount of money. This may be because of increased production costs, higher energy costs and national debt. When the prices of goods reach their ever higher stage, people tend to cut on overall spending, luxurious spending, restrict them towards basic necessities and thus save more n more. As a result, GDP declines when people begin to cut expenditures in order to cut down costs. This makes the companies to cut their costs as well and they chuck out workers which brings unemployment.

Thereby, following are some of the factors that push an economy into recession…..

• Credit crunch - shortage of finance
• Falling house prices - related to shortage of mortgages and credit crunch
• Cost push inflation squeezing incomes and reducing disposable income
• Collapse in confidence of finance sector causing lower confidence amongst ‘real economy’

Recession brings with itself all major consequences which create mayhem within the economy. One of the major effects of recession is Inflation. Recession comes into effect with inflation while on the other hand; it is one of the after effects of recession. This means the commodities reach their ever highest prices and people generally cut down on costs. Hence, inflation becomes the major effect left out by recession. Lower income is another effect of recession in the economy. As people cut down on costs, they tend to buy less which reduces the income and thereby fewer profits or no profits. The next consequence is the increment in mortgage rates. Lenders increase the mortgage rates in a bid to cover the losses they bear during that time. Employment opportunities are also one of the main targets when the economy is burning under recession. In order to cut down on costs, companies cut down on employment opportunities thereby leading with unemployment in the economy. So when an economy enters into recession, firms experience a decline in profitability. This is because:

1. Tendency for price wars to develop in a recession. Low sales encourage firms to cut prices

2. Falling sales will lead to lower revenues.

young jeezy - The Recession (Intro) - The Recession

Nearly all Churches necessitate the need of a commercial real estate financing. The financial sources for real and substantial estate includes: Regional banks, Private investors, Insurance companies, Saving and Loan institutions and Mortgage banking firms. First let’s touch on the obstacles that occur during the process of acquiring the church mortgage loans & church financing.

The Major Church Financing Difficulties:

(1) Church properties are unique and so, for this reason Lenders have a great apprehension regarding this matter because if the loans are not paid within a stipulated time, Lenders will be accounted for it. They have to assume ownership of the property. Owing to unique property features, it is not going to be easy to come across a new owner.

(2) For getting the hold of church loans, Lenders often entail the need of “personal guarantors” especially on account of prior observation with reference to the complexities that are involved in selling the church property again.

(3) When the church financing needs are attained, there are many objectionable terms that get exist. Such as: Minute amount of loans, low loan-to-value (LTV) of 50% to 60%, short-period time of loans and rates of high interest. By this, churches get many possibilities to face the countless financial difficulties.

(4) More than Purchasing and/or Refinancing, Church Financing, Church Construction Loans, Church Renovation and Land acquisition loans are considered as more intricate to deal with. Therefore, needed repairs are delayed for an indefinite period and new churches take lots of years to become a reality.

The Practical Solutions for the Problems which have been Issued above are:

(1) High LTV: High LTV of 75% to 85% would generate a realistic amount of about 15% to 25% that can be utilized for the purpose of down payment or non-financed portion in refinancing.(2) Long-term loans: To make the church financing more successful, rather than short-term, church financing should be of a long term, i.e. up to at least time period of 30 years.

(3) Non-Recourse Loans: Being reluctant towards individual guarantors fetches a non-traditional church lender. And than through this approach, church lending will no more rely on individual guarantors for the church financing.(4) Large sum of Loan: Ability to accommodate large church loan needs, at least of $500,000. This move would than persuade churches to finish their most business financing in one stage rather than by going through many stages.

(5) Low interest rates: Churches are being charged with the sky-scraping interest rates than it is actually required. Church financing payments can be phenomenally reduced if the payments are restricted to prime plus 1% or less than that. As a result, long-term church loan as well as decrease in overall payment will improve the church cash flow considerably.

For more detail log on to Church Financingwww.church-financing.com. Church Financing is a church loan division of Griffin Capital Funding offers church financing and loans with no personal guarantees, favorable rates and good terms.

Church Financing

Financial Markets (ECON 252) Professor Shiller provides a description of the course, Financial Markets, including administrative details and the topics to be discussed in each lecture. He briefly discusses the importance of studying finance and each key topic. Lecture topics will include: behavioral finance, financial technology, financial instruments, commercial banking, investment banking, financial markets and institutions, real estate, regulation, monetary policy, and democratization of …

The advanced in technology, especially in electronic transaction has changed the conventional form of securities trading. Moreover, traders are getting many benefits from this improvement. No more wasting time go to offshore broker to trade, no more additional cost to trade in conventional way. Online Trading gives easiness for traders who demanding simplicity in Stock Trading.

The competition of Online Broker companies is getting tighter since traders become more selective when investing their money. Main aspects such as legality and credibility of a broker should be considered as essential factors to be verified before going further.

Various features and benefits from choosing specific broker should not bring confusion to traders. As long as the features fit with what traders needs, especially their trading style and preferences, traders should able to choose online broker properly.

  Massive reduction and liquid problems of credit raiting in banks (for the first time in (Northern Rock) in April and May 2007 and since 2005, the range of problems such as the results of slump in real estate, influence on devaluation bank assets and manifestation of bankruptive effect on a number of banks have reached crisis point by September 2008.

Financial sector was considerably damaged by unprecedented growth of prices that significantly declined after eliciting financial crisis and credit restriction.

In the structure of consumption, forced high cost made a negative influence on the broad masses of population’s savings and accordingly on the size of investments, also it caused the rise of cost price. therefore, demands decreased because of two factors.(second one wich was partially formed by the influence of the first one is connected to the reduction of corporations winning and the slump on their bonds). In 2007 for the purpose of reduction in the price of oil, concrete non-co-ordination experiment by the central banks of separate countries, in the usage of money credit regulation in currency rates, considering taxation balance sheet. On the background of multidimensional, different priorities and difficulties, the problems were mostly revealed in the difference of interest rates. The rise in oil price, must have firstly been reflected in the USA $ purchasing capacity, but in a number of countries, all over the world, oil import (reflected on money) when in deals, it is invested in USA $, it raised the demands on USA $ currency and conditioned the devaluation on Japanese yen, euro and pound sterling. For  the beginning of reduction in oil price, financial crisis had already been  from the USA, withal president election in the USA created an atmosphere for the better future changing. Currently, the countries all over the world, cut main interest rates and accordingly the difference among them is decreasing. 

Securities market has significantly been damaged by the devaluation of assets of special companies, established by banks for the purpose of credit securitization. (SPV) assets include commercial debt obligations (CDO) namely, in this case, mostly mortgage credit obligations (CMO), that represent one of the varieties of obligations, provided jointly with active bond securities (ABS) and mortgage bond securities. This real pyramid, in which every following, next level securities were partially provided with lower level securities, but one of the providing means for MBS was corresponding real estate; Herewith, the partial price cut for real estate depreciate all kinds of securities.

WHAT IS HAPPENING IN WALL-STREET? Together with banks, those who can’t cope with the loss counting caused by  subprime credits and giving bonuses to are blamed by the experts of financial centres for crisis, the offenders are so called “quants” in Wall Street and the world’s main financial centres. It is difficult to judge the point from only one side, current events are adequate to the saying “fish in troubled water”. On the one hand we can’t blame financial institute for aggressive crediting to maintain the market share, if it is prompted by positive expectation, but only in the case of legal-regulative normatives; just these regulations must not have given the opportunity to the banks and other financial subjects to behave so irresponsibly and indecorously towards the depositors and debtors’ funds (or it would be much more correct to say that, they shouldn’t have done it in this way). As the millionaire punters do, in the casinos of Monte Carlo. Existed frames of regulation (such as regulative normatives, namely, in the ratio of risk assets to the capital coefficients, liquid normatives of reserve demands, limits of open currency positions and others from the arguments of formal protection) do not or cannot correspond to the new methods of risk controlling, development of credit derivatives and expansion of out balance operations. Herewith, the bonus compensation, of employees, that is actively used as a repayment scheme by western financial institutes (obviously, we do not mean only brokerage houses). This increases the interest of agents in the growth of deals in size and also will rise the interest conflict, when operation offers the agent, the growth of bonus payments, but in reality it threatens the principal with potential loss.

Now, let’s go back again with “quants” and their mathematical methods, that is somehow based on the exact science, but resembles sophistic resistances of high mathematics, that is e.g. connected to the correlation of two inspirational functions or to one and the same number, that is the result of again two functions correlation.

It is paradoxic, but just such details made us move from the science, constructed on elementary basis to the most complicated and the most common concepts and dichotomy of time discreteness. (The last one is universally acknowledged in philosophy). It sounds again paradoxic, but wisdom is in simplicity and according to Georgian writer Ilia Chavchavadze, there are no small and big miracles. Sophistical models, that use multileveled and multivariational methods of analysis, often lose the focus and their usage in controlling assets and obligations, creates it self the new origin of risk. Besides, most of these models are far from elementary basis and correspondingly the results of analysis are difficult to be apprehended and sometimes even unessential. It must be said that, during the last several years, the programmes of financial management are available through the internet and the providers try to advertise their products by means of difficult multidimensional scheme annotation and incomplete promo versions; amongst, there are lots of facts of amateurish creativeness. Sometimes the part of  unqualified managers follow Uindly and use these computer systems with confidence. Besides incorrect decisions and problems, we mustn’t forget the problem of villanios and indecorous act of managers and generally the staff. It is important to consider the fact of misinforming the shareholders and markets by means of asymmetric information to get the desirable aim. Recently, this kind of incident happened to Societe Generalr after it revealed that, the management had executed a series of “elaborate, fictitious transactions” in 2008, in the hope of covering this problem from other accounts and after E 5 billion fraud that had lately been informed to stock exchange and shifted the blame on employee. The fact that the sums are so large, gives an indication of just how leveraged everything is today and how volatile equality positions are - conclusions are up to the reader.

CAUSE AND EFFECTIVE ASPECTS OF CRISIS. And still, concretely, what is a main virus, that developed immunodeficite syndrome and collapsed all the economy and its vital financial system? Only separate aspects can be shown in connection with this problem and only on the basis of partially revealed diagnosis of symptoms. In accordance with, if what causes and effects of problems we connect to each-other and discuss more deeply. The rest of the aspects will be presented comperatively in a narrow sense or in other worlds, we can’t manage to reinstate the reality of cause and effective problems completely. So far, it is beyond human mind to imagine more than three-dimention complex sphere. It is theoretically proved and is implemented in the risk evaluation and computer models and system controlling. The irrelevant quality of unequal confidence of financial managers as well as ordinary people, towards the not-fully completed products of  cybernetics and also the most important post economic virtual illusions of the outgrowth of scientific-technological revolution simulational computer models of financial, or other risk taking portfolio management, radically changed the cognition of reality, attitude towards risk, future realizations and they turned into the main provocative factors in the ruling process of unnatural approaches of interrelations and scale-proportions.

It is really difficult to define for the first time, what was the reason for sacrifing the functioning of billions of dollars worth securities - global financial crisis or general economic problems. The tendency of vector in these interactions will be manifested according to what problems will be discussed and at what level or in other words, the direction of this vector is changing in the dynamics of crisis development.

The problems of credit raitings and liquidation in the bank-credit organizations were almost less before the crisis revealing, not because of the fact that credit risks were not increased, but they were simply shifted in outbalance accounts. The reason is one sided - as increased risk factor not to have been used in calculation of assets, according to the risks of regulation demands. Instead of risk hiding and debuting liabilities, for the purpose of attracting liquid money flows, the usage of security and credit derivatives are cursedly effective, though regulators’ reaction found out to be quite belated and mild.

INFLUENCE OF PRICE ALTERATION ON REAL ESTATE? On the one hand eluding the restrictions, connected to the regulatory arbitration and 10-15 year-practiced prognoses, based on economic growth tendencies, pushed the credit managers into very bold credit expansion. At the initial stage, it caused consumer’s boom, growth of prices in dwelling and economy. At the background of increased activity, corporations were trying to increase the money flow and issue securities, bonds and other obligations; together with the appearance of new corporations and complicated securities, potential investors. (among them, there are a lot of unskilled people, who most of the time buy securities through internet, not only because of their real income, but according to their interest rate, without any serious risk-analysis). The bankruptcy grew the attractiveness of debt securities as much as it was possible, as if “financial balloon” would have been “inflated” towards credit organizations and torn away the most rapidly increasing credit sector of economy from the real one. Formation of “credit balloon” is connected with the housing and dwelling space boom. The price up growth, caused by increased accessibility of mortgage credit, could have been continued until changing the situation in the real estate market, although the limited immigration to the USA and the UK cut down demands of dwelling-spaces in these huge markets. The banks were interested in increasing the costs of real estate. It can be explained by the following conditiones: mortgage credits were provided with the flats on sale and accordingly their market price defines the existence of possible losses or their size of credits in the case of default by debtors, until the term expires or before default, suitable credit letter or security, steadied by it, as the cost of assets.

Creditor’s interest, connected with the price growth of real estate is against the debtor and that is the most essential during the period of mortgage, price growing in funds flow increases the share of expenses: Debtor’s funds flow is the most important component of its solvency. Undisturbed up growth of price on real estate, accordingly a great number of debtors and reinforcement of  competition among credit organizations: motivation of cutting down the expenses of debtors’ credit analysis by banks, conditioned mortgaging credit insurance to be accented and in fact, this priority made debtors credit analysis into a minor importance question. Though it must be the first and uppermost source of covering the loans and according to the request of prudential law, mortgage as a means of covering loans must be used only in the extreme situations. Yet, this request is followed by banks, still, the important is not only loan repayment by debtors, instead of the results of credit analysis (especially, according to the corresponding funds-flow) but dependence on insurance while taking decision about credit, means that the possibilities of default indices are quite high. Rising by 2-3% in the real sector of economy, in the conditions of property differentiation growth, for the part of such outnumbered debtors credit covering has turned out impossible. The flats, had been moved in the property of banks, still returned back to the real estate markets.

Because of increased deliveries and frequent defaults, the limit on distribution the mortgage credits, caused disastrous slump in real estate property prices. On its side it ment the decline in the maintenance of mortgage credits. Tendency of slump and deterioration of  assets quality, that also conditioned the aggravation of liquidity problem, (during this period, reduction of credit rating, quite scared the investors and hedge funds) made the banks minimize the new credit delivering process. Real estate delivery, was mostly realized by using the mortgage credits and without this, the recession of building sector has not been delayed.

Conclusions on credit markets. .Let’s form everything in details and items. All the above mentioned and other problems as well and concretely the motives of credit crisis from the primary sources of financial crisis:

1.      While crediting, it wasn’t clear for the experts, if the pretender (afterwards-debtor) would manage to generate funds-flow for covering the mortgage.

2.      It was almost possible to cover the price of purchasable house by mortgage or in other words, debtor’s participation was minimal.

3.      Interest rate could be changed into many kinds of loans or increased distinctly, that wasn’t realized by everybody else.

4.      Very often, mortgage loan was used for other purposes by debtors in order to get ready money.

5.      Many credit officers and brokerage firms pushed potential debtors and helped them to create a false profile (mask) of solvency, with the object of getting bonus, commission etc.

SUBPRIME MORTGAGE. SUBPRIME CREDITING . We have already talked about the question of debtor’s solvency in the section of cost economy and accent ensurance. We will also make remark that the analysis of debtors is quite complicated. The causing problems are the following: Rapid spread of network marketing, development of virtual economy, (when the payments and incomes, estimation of softwares are not fixed) also the difficulties in estimation of managing skills and the motive power of corporative relations of human capital conditioned and increased the frequency of inadequate decisions.

Herewith, the banks, in comparison with their rivals were trying not to bother potential debtors infrequently at request of documentation. In accordance with the share of subprime mortgage of incomplete documentation increased from 25% (2000) to 43% (2007).

Subprime crediting due to lack of savings, required the reduction of complicity demands on buying flats for  the low income debtors. The forecast for the price growth of flats, made subprime mortgage acceptable. Debtor’s participation  by using mortgage for buying the flat has reached 14% by 2000, although it has decreased to 4% since the following year and stopped at this level before revealing the crisis. This even turned into the important stimulator for the mentioned speculations.

Considering the high crediting and ensuring, accepted by giving subprime credits and credit derivatives (we mean, already existed fluctuations in real estate markets in 2001 and the tendency of slump in commercial and housing sales since 2005, also, according to the increased risks, rised expenses of nonbalanced operations of risk controlling and the slump of securities steadied by assets, due to the reduction of credit rating) compensation of market risks was developed by banks under the condition of giving credits by variable rate. If it fluctuated between 10%-23% in prime mortgage, for subprime one, amplitude and its lower bound as well were more: 50%-70%.

Generally, characteristic for RAPOC models, conseptional basis “profitableness according to the risk” is acceptable (in my opinion) on the level of crediting and in common, on the theoretical base level of investment, as the criterion of conferring priority to homogenous creditors, either for selecting one from investment project. But, it must be taken into consideration -how it will be guaranteed and how often it changes the corresponding risks of interest rate for different quantities. In case of large -sized loans, the growth of interest rate has a direct and complete influence on solvency of contragent itself. But in reality, as it seems for the people having less payment proficiency, interest demand was higher, than in the case of prime mortgage.

It must be said that, in case of business loans, in the form of providence (mortgage) because of the connection to the risks of the same businesses, a great share is applicable assets.

The banks were manipulating into interest rates not so often as they were analyzing the business plans and financial conditions of firms maximally. Herewith, the possibility of diversification, according to business types is higher, especially in the standpoint of supply. That is why, credit crisis and default quantities were mostly manifested in connection with mortgage obligations. Easily obtained supply, that in any case was presented by real estate during the default case, moved to the property of banks and, after they were offered to the market, that influenced on the increased supply by slump and it was difficult for them to repay the default by means of mortgage realization. At the same time, because of the practice of so called “air” selling, part of incompleted flats had not been finished by the time of default. Because of price slump, construction boom first was changed to stagnation and afterwards the recession case was revealed. In the chart, is shown the dynamic of price indexes of dwelling-houses, according to the basic level in 2000. As it is clear from the chart the pick in 2005, prices have been declining distinctly, but the number of vacant dwelling houses are increasing. Due  to the diminution of new constructions, this growth is mostly continued at the expense of confiscated flats by debtors and creditors, that makes the chart bold.

Owing to credits “corruption” and intensification of liquidity problems, part of the banks stopped even giving other kinds of credits or made the conditions stricter. Many banks experienced the reorganization of problem protection difficulties in regulation norms, capital and coefficient of liquidity; part of the banks bankrupted. Since the beginning of crisis in the USA, until now, the number of commercial banks has decreased about from 7280 to 700. (It is put of sense to name the exact number, as the unity process between the banks and their bankruptcy are still in progress. It became necessary to expiate the huge grants-Fannie Mae and Ginnie Mae by the Federal Reserve systems.

Broadening of broker’s loans is one of the most important surroundings. The share of so called “wholesale loans” in the total credit size widened from 60% segment in 2004 to 90% in 2007. It is natural that credit mediators (but only brokers not dealers) are less interested in guaranteeing credit refunds than banks.

Taking credit officer’s interest (credits were issued even to the clients of less-solvency) was caused by bonus wage payment scheme, according to the  issued credits, about what, we have already mentioned above.

Competition made banks satisfy the borrowers’ interests in cash, connected to crediting; this fact and the reduction of debtor’s participation demands give the chance to borrowers to use credits aimlessly.

It caused the system mismanagement. (So the drawbacks of this system itself and inappropriate evaluation of its nature). 15 year old economic development, without any obstacles, made people think, that without rising the real sector of production, goods and services, enrichment were absolutely possible. Financial sector made a colossal, titanic oppress on the real sector of economy. Nowadays, only 2-3% of financial operations belong to real sector, but the rest of the funds work inside the finances. Current world economic financial crisis “from the great depression”, almost after 80 years, still confirms, that the self-flow economy develops not only within the bounds of maximal possibilities, - as it is drawn by Keens and other etatism representatives” (French. Etat. State) point of view, but it became the world’s highest pyramid of property differenciation, that now stands upside-down and oven one push, threatens with destruction. For the collapse of this pyramid, it was enough to break one of the connecting balance lines and such was the credit line, stretched between the building balance and banking giants, (here is not meant “credit line” defined especially from the view-point of economical terminology) that was “hung in the sky”. We will see, that construction of new houses was going on, according to the pyramid scheme, in the way that, the flats, in multistoried houses were sold, without even having the foundation under. Such interrelation, in the case of real situations is even necessary for the stimulation of economic growth, but while making prognosis, distinct kind of conservatism is necessary.

Analysts admit, that the main reason of today’s crisis, are not the problems of the USA mortgage markets. Mortgage is connected to real economy, that on its side is an essential instrument of investment demands. Mortgage liabilities in the USA complies $12-13 billion, but in the world currency markets, the size of operations combine $2 billion in a day and from here, only 4-5% of operations are in real economy and the rest of it is speculative money.

The scales of speculative operations were growing at a colossal speed -12-15% in a year. Money system, that made such an error, is impossible to exist long. It shakes the institute of private property., that requires real, not virtual money. The first signs of crisis, as a rule, influence on banks, and only afterwards on the real sectors of economy, and after all, it moves to the financial sphere of the state and budget system. As the analysts say, today we are on the first stage of crisis.

As it is known, annually $50 billion cost of goods and services are produced all over the world, just this sum of money is contradicted the securities of $1,5 quadrillion value; such as, state and private bonds, shares, bills and so on and so forth.

Central banks from the other countries, with assistance of world’s financial system, began milliards of dollars in flow. At the distinct stage, it helped the situation, but temporarily. According to some analysts, it is impossible to fill this $1,5 quadrillion cursed hole, and even the total money reserves of the USA and Euro-zone central banks won’t be enough, moreover, pseudo-money, that is called securities can’t be transformed into cash.

What should we do?! According to the analysts. In order the world not to be found at the edge of world catastrophe, they should work in two directives: Continue real economic crediting, even if only today’s existing level be maintained.

The first direction is quite difficult, but necessary. Every day new information is born about “economic catastrophe” and the reason of it is credit freezing.

Financial structures only want the cooperation with the cash-holders. Though, the crises destructed everybody’s capital. From the view-point of experts, one of the survival ways in economy is to involve as much capital as possible in the economy. The size of recapitalization should be spread more and more, and the state control should become stricter in order to male almost the nationalization of the significant part of financial system, but only temporarily. Afterwards, when the situation returns in its usual regime, again start its denationalization. Experts example of this is Switzerland, which after fighting against the crisis at the beginning of 1990, managed to return its shares again in bank.

Because of the crisis, in a number of countries, complete or partial nationalization of took place. Lately, Great Britain put GBP50 billion (about GBP64 billion) on the recapitalization of Britain’s big banks. Great share, from this money - GBP37 billion is for the following banks: Royal Bank of Scotland HBOS and Lloyds TBS. In return for this, it is being planned to give shares from Royal Bank of Scotland and HBOS transfer control packet to the state. It is supposed that the temporary nationalization of banks will last more.

As we’ve mentioned above, we are only at the initial stage of crisis, but economist’s forethoughts are realizing and after New Year, that will collapse many well-known banks, industries, laboratories, universities, and after all the people’s future.

Somehow bank sphere, although temporarily sighed, but still real sectors of economy stayed without money. Banks don’t issue money any more. This terrible tendency will cause a huge problem not only for the real sectors of economy, but also for separate countries. Many countries live on the credits of financial institute and if the situation doesn’t change, a number of countries such as Pakistan, Argentina, Mexico, Hungary, the Ukraine ad others are against the danger of default. Furthermore, at the end of 2008, Iceland itself was at the edge of risk realization factor and the British Financial Institute were blamed for this.

“Fighting” methods of against crisis. Different methods of treatment are used in different countries against economic crisis.

In this or that sphere of economy, fighting against crisis, accordingly can devided into three models:

I. When the total sums inflow in the financial field, or the very case, that America did. It put $2,3 billion on assisting banks, but for supporting the real economy-10 times less.

Goverments of Canada, Ireland, The Netherlands and Sweden are also following this principle.

Method can be considered as the second model, when the government refers all its efforts towards the real sectors of economy. Just this way Socialist China was chosen. Its authority made an investment in infrastructure, agriculture and social fields.

According to the analysts at the company Merrill Lynch, just this was the reason that the Chinese market is still in the center of attention for investors.

Some countries try to give the equel hand of assistance to financial sector as well as real economy. This model was only used, after the bad example of the USA. How many countries believe that only with the help of financial sphere, crisis would not be got over. Such countries are: Germany, France, Italy, Sweden and Japan.

The leaders of European Union, declared the assistance of $200 billion to member countries still in November. On 12 December, just this antirecessionary plan was proved in Brussels. According to the plan each member country will assign about 1,5% of money from their total income. C 30 billion from C200 billion will be assigned by investment bank. It is underlined in declaration, that according to the viewpoint of European Union countries, in the separate sectors of economy, taxation rates and extra value in taxations can be cut. According to the agreement, of European Union won’t let any big financial organizations be bankrupt. Because of maintaining the creditworthiness of banks the government plans to buy their shares. In short, for stimulating the economic growth, European Union will take deep co-ordinated measures.

According to experts, the world’s leading state have already spent in all $9,4 billion for antirecessionary measures.

Any kind of funds that will be used for the growth of economy is acceptable. Those expenses, which are used for social programmes and economic activities by states, it is possible to be a very heavy burden, bur the expenses, that will be assigned in the future because of today’s inactivity, will be much bigger burden, than the savings themselves.

Economic Doctor of Science Professor

Lamara Qoqiauri

Having difficulty understanding the 2008 US Financial Crisis? Here’s a short animated video that explains - visually!