sábado, 12 de junio de 2010


By: Felipe Argote

The euphemism the specialists current linked to Austrian economics and finance, often uses to cover the actual terms are so discredited that sound bad no matter the language. If you read in a publication about bad debts and junk investments the reader will know it refers to properties with little chance of becoming liquid at book value.

So the ultra conservative trend experts coined the term toxic assets as verbal paint tried revamping the thousands of millions of dollars locked in properties that are now well below book value, explode like a balloon after the housing bubble that they created.

In September 1988 while in the presidency of George Bush exploded the last U.S. financial system crisis. The reason is none other than the minimal state supervision in financial transactions as a cornerstone of the neoliberal model, which made the merchants bank loans mortgage borrowers unable to pay.

The system was not all that complicated. It offered you established a payment mortgages to purchase homes beyond the payment capacity of cancellations by customers who were not the same throughout the course of the credit. For example, they offer you to pay a relatively low monthly payment the first five years and then a monthly increase for the fifth year, and then another increase from the tenth, arguing that even though today you can not pay the monthly, you would pay in the fifth and tenth. They assumed that the growth of the economy and growth in the debtor's income would have capacity to pay when they appropriate the increase. Of course, the fifth year, many could not afford the enhancement in the installment and lost their homes. Million borrowers became homeless.

Some commented that such sales unsuspecting high risk are not suitable for banks and is therefore suspect that they placed the noose around their own neck. Nope. The bank in turn sells the receivables in the form of bonds. The buyer at that time would have no apprehensions of getting the bonus because almost by definition is considered the safest investments are those backed by mortgages. So the banks sell the debt and recover the gain.

Of course, this end in a kind of Ponzi scheme in our area better known as a variety of pyramid.

The situation in September 2008, could not be scheduled less than frightening. The fall of Lehman Brothers puts the American economy to the edge with immediate effect in England first and then the rest of the developed world. Lehman Brothers is a financial giant created in 1844 by an immigrant from Bavaria, Germany. He called the company with his name H. Lehman but then with the inclusion of their children Emanuel and Mayer was named Lehman Brothers.

Then fell in line mortgage companies The Federal National Mortgage Association, popularly known as Fannie Mae and the Federal Home Loan Mortgage Corporation, better known as Freddie Mac, and later the insurer AIG American International Group, Inc. (AIG). This one is the largest U.S. insurer.

It stuck in waist-crisis discussion of neoliberal conservatives was how the state should intervene to avert catastrophe. Here are again the toxic assets. It was proposed that the government, with taxpayers' money acquire the bank devalued properties. Their Republican political and theoretical training not even allowed to see the possibility of nationalizing these companies, the state with a share in the private sector was a sacrilege. But although it is not part of the manual, they wanted the government to get rid of their toxic assets buying them at their book value. Faced with this dilemma no one decides to take the step and the crisis got worse day by day. This was in the midst of the American elections. Even the Republican candidate John McCain stops his campaign and went to Washington to participate in the discussion of the crisis.

At the end it was England and Prime Minister Gordon Brown who decided to nationalize the failing firms instead of buying their toxic assets. United States imitated and took up to 80% of AIG making it a state enterprise. Nobody would have suspected three years before that a fundamentalist neoliberal government would take measures like these more like a Keynesian model to that of Hayek and his followers. The new Barack Obama administration acquires General Motors to buy 80% of its shares. Then buy lots of shares of companies as important as Citigroup, Chrysler, GMAC and others. The toxic assets are still there, but companies and dignitaries enjoyed a strong economic boost from the taxpayer, through the socialization of the losses of their companies

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