In general our country has undervalued exchange rates to improve its international competitiveness, with exceptions such as Brazil and Mexico have greatly appreciated their currencies and have other financial mechanisms to promote their exports.

But this growth cycle is at the expense of primarization economies, a weak industrial growth, the levy of natural resources and environmental degradation. And especially the maintenance of deep social inequalities, these are noted in access to housing, health, education, land and communications.

Today in Latin America is considered poor, 38.5% of the population (205 million), 53 million go hungry and 16% of those already suffering from chronic malnutrition. The richest 10% 48.6% appropriates the wealth produced by working alone, while the poorest 10% receives only 1.6%. The gap is 30 times. (Another digression: in our country are about 11.5 million poor people, and more than 3 million homeless and the gap is 31 times higher than in the crisis of 2001).

But the extraordinary low interest rates in the U.S., three years at 1% per year, less than inflation and the lowest in at least the past 50 years, created a highly liquid, a plethora of financial capital is the origin of the housing bubble that burst in the middle of last year.

“Subprime mortgages”, “credit markets,” financial derivatives “,” investment funds “,” complex structured investments “that were supposed distributing the risk and capital more efficiently and not involved only banks but other institutions were created for the purpose, are all without any state control instruments and violating the most elementary rules created to provide financial affairs on the basis of an enormous mass of virtual capital. That’s why there was talk of an expansive cycle lying about finances.
The crisis exploded by subprime mortgages, the now notorious sub-prime mortgages that were granted without much support from the debtors, at very low interest rates and a grace period is that for two or first three years, he drew the mortgage did not pay any fee.

But this economy roll over finances, exacerbating the consumerism of American society began to overheat and generate inflation, so the Federal Reserve (the Fed) decided to re-raise the interest rate. You should know that this rate is driving the Fed funds rate financial market, the public rates are other but move in relation to this. On the other hand you must also know that this economy is monitored with what they call “inflation targeting”, so as prices go up or down the benchmark move it down or high, and thus increase or lower domestic demand. As the U.S. economy is sustained by the consumer and credit (the most important document is the credit card) the fee is a variable for the course of the economy.

The issue is that the Fed raised rates 14 consecutive times, taking it from 1% per annum to 5.25%, which popped the housing bubble, homeowners with mortgages bought backless could not afford the fees, the banks ran out of funds , did not lend to each other in the interbank circuit, and triggered a liquidity crisis that spread quickly to England and then Canada, France, Japan and Australia. Is that U.S. banks to continue the financial wheel had taken funds from banks in other countries by issuing securities that were in support … those same subprime mortgages. It was not really anything other than the creation of an enormous amount of virtual money so that the expansion of the crisis to other countries was inevitable.

Taking different source press reports have made a short sequence of development of the crisis that you can see how quickly they went global and the scale of the amounts involved. (See box)
What sets the current crisis in the past, Mexico (1994), Southeast Asia (1997), Russia (1998), Brazil (1999) and even Argentina (2001), is that these were in the periphery of the system, so operating as safety valves, but now is at the heart of it: US / UK.

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