During 2008 the latest devastating worldwide financial crisis started. Humanity has seen lots of crises of various types but nobody believed a financial collapse of this magnitude could happen again. It was an enormous surprise for the world when the giant Lehman Brothers went bankrupt. Many people were concerned that this event was the beginning of the financial debt crisis, but actually before this corporate collapse many American people were not able to pay their mortgage. This complicated situation was based on wrong financial management and lack of transparency. The enormous desire of banks to make more and more money,made them irresponsible. Most banks and other financial institutions allowed the lending of the so-called “subprime mortgages”. Literally, they would lend credit to everyone who wanted it without checking his/her financial background or credit history. This model fell apart and started the new debt crisis.
The financial crisis changed the growth pattern of the world. The mortgage crisis affected deeply the US, Europe and Asia. This collapse changed the power balance in the world. There are new super powers such as China and Brazil.
The US problems began with the debt crisis but their consequences are not just financial. The American crisis is not just a mortgage crisis, but also a social and economic one. Unemployment went up and public discontent grew as well. The American president Barak Obama promised serious reforms in the healthcare and educational sectors. Another problem was the crisis of the value of the dollar. Actually, the dollar crisis is strongly related to the debt one. Weak financial institutions raised the distrust in the American currency. However, diminishing competitiveness and financial excess (the enormous American budget deficit) are the real factors that influenced the crisis. By April 2012, the U.S. had serious problems with its deficit, which reached record high levels.
The European crisis began later and “flourished” after the end of 2009 to the present 2012. European countries experienced a sovereign debt crisis as well, but some of them deepened their instability. Countries such as Ireland, Greece, Spain and Italy has had tough crises which continue to the present moment. Ireland and Italy coped with some of their problems. They accepted help from the most powerful European countries such as Germany and France, and from some lenders of last resort such as the IMF and European Central Bank. Spain and Greece are still in a difficult situation. They are not able to handle their high levels of unemployment and economic instability.
What will happen in the near future is not certain. Directions are changing permanently. Political leaders should be more responsible and take well thaught decisions about the future.