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What caused the current economic crisis in the United States?

In general terms, The crisis was caused, mostly, by the collapse of the housing bubble in 2006-2007. A large number of mortgage loans securitized on these lost their quote and, suddenly, became illiquid market until then sought funding a significant portion of real state in the United States. From there, and given the framework of structured products around these securitized assets, a growing distrust began in the financial market that is likely to result as coordinated intervention by governments in recent economic history. Also, the finance authorities made a series of mistakes on the regulation and macroeconomics policies which led to inappropiate behavior in both the housing and finnacial market. A lot of people have been affected by this crisis, specially middle clases, because millions are unemployed and also millions have lost their houses.  
SOURCE: CREATIVE COMMONS / FLICKR / IMAGES OF MONEY
Now, i'm going to explain deeper the causes of one of the most horrible crisis the United states have suffered: 
The immediate cause of the crisis was the burst of the housing bubble. Against a backdrop of abundant credit, low interest rates, and rising house prices, lending standards were relaxed to the point that many people were able to buy houses they couldn't afford. When prices began to fall and loans started going bad, there was a severe shock to the financial system. Imprudent lendindg certainly played a role, but subprime loans, which are loans issued to people with poor credit histories, were a relatively small part of the overall U.S mortgage market and of total credit market debt outstanding. 
http://rightfromyaad.wordpress.com/2013/04/05/is-this-happening-again-a-new-us-housing-bubble-say-it-isnt-so/
With its easy money policies, the Federal Reserve allowed housing prices to rise to unsustainable levels. The subprime   homeowners were the most vulnerable part of the population. They didnt have retirment accountsthat they could draw down or family whom they could borrow, when they found that they could no longer meet their mortgage payments. When they no longer had equity in their home against which to borrow, many subprime homeowners had to default on their mortgage. Subprime lenders aggressively, and often marketed mortgages for refinancing to low and moderate income homeowners as a way of getting access to extra money to meet bills or pay for big purchases like a care or home remodeling. As a result of these subprime loans, families who had been secure suddenly faced the loss of their home. 

 Securitization 
Securitization fosteres the "originate-to-distribute" model, which reduced lenders' incentives to be prudent, especially in the face of vast investor demand for subprime loans packaged as AAA bonds.
Ownership mortgage-backed securities was widely dispersed, causing repercussions throughout the global system when subprime loans went bad in 2007.
The credit Rating Agencies gave AAA ratings to numerous issues of subprime mortgage-backes securities, many of wchich were subsequently downgraded to junk status. Critics cite poor economic models, conflict od interest, and lack of effective regulation as reasons for the rating agencies' failure. Another factor is the market's excessive reliance on ratings, which has been reinforces by numerous laws and regulations that "use ratings as criterion for permissable investments or as a fctor in required capital levels" (Jickling, 2010) 

 The Crisis: 
According to the movie Inside Job by Charles Ferguson, the market for CDOs collapsed and investment banks were left with billions of dollars in loans, CDOs and real estate couldn't unload. In 2008 Bear Stearns ran out of cahs, the Federal Government took over Fannie Mae and Freddie Mac, which had been on the brink of collapse. Also Lehman Brothers collapsed. Merrill Lynch which was about to collapse, was acquired by Bank of America. Hank Poulson and Timothy Geithner decided that Lehman must go on into bankruptcy making Wall Street panic. Two days later Poulson and Ben Bernanke, Fed chairman, asked Congress for $700 billion to bailout the banks, even if million of people and some congressists opposed this action. 
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http://www.neoformix.com/2008/BushSpeechOnFinancialCrisisFAIL.html

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What are the key differences between Demorats and Republicans particularly on foreign policy?

To introduce this blog, i would like to start with a brief history of the Democratic and Republican parties to know a little bit more about the origin and evolution of the most important political parties in the United States of America.

The two original national parties were the Federalist Party and the Democratic-Republican Part. In 1816, the Federalist Party ended leaving a single political party for a short time. However,a split in the Democratic-Republican Party in the mid-1820s gave rise two factions: The National Republicans and Democrats. When Andrwe Jackson lost in 1824, his supporters created their own organization to get him elected. After his election in 1828, the organization became known as the Democratic Party.
http://commons.wikimedia.org/wiki/File:Jackson_and_Van_Buren,_1837.jpg
During the 1840s and 1850s, the Know-Nothing Party competed with the Republicans to replace the Whig Party as Democrat's major opposition. In 1854, a coalition of anti-slavery forces organized to form a third party, called the Republicans. The Republicans attracted anti-slavery members from the two major parties. Their first candidate, John Fremont lost the elections in 1856, but their second candidate, Abraham Lincoln, won in the next elections.
http://commons.wikimedia.org/wiki/File:Republican_presidential_ticket_1864b.jpg


 Since the Civil War, The Democrats and Republicans have been the two major political parties in the Unites States. The Republicans dominated national politics from 1860-1932, crontrolling Congress for most of that time and winning all but four presidential elections. Between 1932 and 1980, the Democrats won seven out of 11 presidential contests, and held both chambers of Congress for all but few years. 
http://www.impactony.com/tag/democratas/

 Now I am going to compare the two major parties and their beliefs in some aspects:

 Major Beliefs: 
Republicans believe that each person is responsible for its own place in society. Government should enable each person to secure the benefits of society for themselves, their families, and for those who are unable to care for themselves. Republican's philosophy is based on limiting the intervention of government as a catalyst of individual prosperity. Government should only intervene in specific cases where society can't effectively act at the individual level.
Democrats believe it is the responsibility of government to care for all individuals, even if it means giving up some individual rights and/or subordinating enterprise and initiative. Democrats have pushed for the centralization of power in Washington D.C, with only secondary consideration for the rights of both individuals and communities. Democrats have favored federal-level interventions that replace community-based solutions to community problems.

 Economy 
Republicans think free market has generated economic growth and innovations. Government should help stimulate a business environment. Republicans are more interested in regulating personal matters and in deregulation of business and economic matters. Also they believe in less spending and a samller government.Republicans want to lowers taxes on everyone, not just poor people.
Democrats believe that business decisions should be guided by government officials and in the best interest of labor unions. Democrats are more interested in deregulating personal matters and increasing regulation of economic and business matters.Also the democratic party believe in bigger government and more spending to expand government. They believe in lowering taxes for poor people and increasing taxes to the rich. 
http://dragancastellon.wordpress.com/2011/08/07/eeuu-democratas-y-republicanos-crisis/
FOREIGN POLICY 
The foreign policy of a political party is usualy the same cloth as its domestic policy. The domestic policy of the Democratic Party is to do away with privilege as between individuals, and to secure the cooperation of all citizens for the common good; its standard of success is not the wealth of a few individuals, but the benefit of the people in general. Its foreign policy is to do away with privilege as bewteewn nations, and to secure the cooperation of all nations for their mutual welfare. The Republican party, on the other hand, acts upon the theory that special prileges are essential for national prosperity, that tariff bounties must be granted to some, in order that those who are more enriched may diffuse their wealth and allow it to seep down to the masses.


In National Defense, which is related to the foreign policy, we can say that Republicans know that defending the United States against its enemies must be a fundamental commitment of the federal government and this requires an effective military. After the 9-11 attacks, America must be ready to fight terrorism abroad in order to keep the country safe.
For over a decade, democrats have advocated to reduce the money spent on military technology and intelligence. The democrat party thinks that security can be achieved by negotiations with other nations, even if they have ties with terrorism groups.
http://gulfnews.com/opinions/columnists/fundamental-difference-between-republicans-and-democrats-1.1095908


We can say that Republicans rely primarily on superior military. No need for treaties and agreements. Work only with those nations that follow U.S.A's leadership to transform dictatorships into democracies.Democrats on the other hand, rely on superior diplomacy. Encourage discussions, treaties and agreements. Cooperate primarly with democracies to make the world more peacefull and more democratic (apparently). 

What I just said is related to the National Defense and it explains why the Republicans want to spend more in military while the Democrats want to spend less. 
In general terms, the Foreign Policy of the United States is based under a few principles that will always be present on its policy. Such as the free market economy, the promotion of the Human Rights, defense of Israel, etc. And they weill be the base to establish their general objectives such as colective security, fight against terrorism, promote the multilateralism and the United States' leadership all over the world. In Foreign Policy, the country have a lot of challenges. On one hand, America has to deal with other powers like China and Russia and emerging powers like India and Brazil, the reinforcement of the autocracies in a lot of States, the development of nuclear activities in countries like North Korea and Iran, and other challenges. 

In conclussion, I can say that the two major parties in the United states of America, have a lot of differences and are in disagreement with mostly everything, but what they have in common is that they formulate their ideas in order to defend the national interest of the United States and its citizens. 
Redes sociales demócratas y republicanos mitin político de discusión EE.UU. - Cienpies Design


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