beg America beg

Americans are on the streets with begging bowls. If you want any proof for that, just read the media reports about Americans selling off their homes at cheap rates to pay off their loans. In fact, houses are available at $2,000 in the US now.
This is because several Americans are caught in the financial crisis and lost jobs and to add to that they have to pay the housing loan intalments. So they are selling houses which has hit the realty sector in the country badly.
To add to that American banks are collapsing like ninepins. As if this was not enough, the $700 billion ‘alms’ offered by the government is stuck in the Congress with the lawmakers from Texas, Arizona, and California helped defeat the credit-market rescue in the US House.
The bill for the bailout was a priority for President George W Bush, yet 15 of 19 Republicans from his home state, Texas, voted against it. Republican presidential candidate John McCain left the campaign trail to help the measure, which didn’t get a single vote from his state of Arizona.
Almost half the usually loyal California Democratic delegation rebuffed House Speaker Nancy Pelosi. For too many lawmakers, five weeks before Election Day, the threat of market calamity and arm-twisting from party leaders couldn’t overcome impassioned opposition back home, where the rescue plan is drawing fire as a bailout for rich Wall Street bankers.
It seems, the debt-ridden Americans are angry. Are these signs of a collapse of US economy. Obvious signs are there. In line for collapse are EU banks. Even though, EU tried hard to provide bailout packages for the banks, several of them have already filed for bankruptcy.
From this crisis, the world has a lot to learn. The crisis also raised concerns about the health of the world’s largest economy.
The US sub-prime loan market (lending money to those with poor or limited credit history), showed a high default rate, which duly affected the prime market.
Why the Americans rejected the plan is because the enormity of the planned $700-billion bailout deal will cost every man, woman and child in the US about $2,300.
The bailout exceeds the total lending by the International Monetary Fund (IMF) since its inception after the Second World War.
The IMF has, since 1947, loaned $506.7-billion to countries in crisis. US consumers have been buying houses at low interest rates, from 1 per cent, rising gradually to 5 per cent. Looser lending standards allowed sub-prime borrowers to take on more debt they couldn’t afford.
Housing and related industries account for about 23 per cent of the US economy and, up until last year, the five-year boom in real estate prices had contributed as much as half of the economy’s growth since 2001, according to Merrill Lynch.
US consumer spending accounts for about 70 per cent of the economy and it’s argued that with sub-prime mortgage delinquencies at their highest, it has dampened consumer spending and derailed growth in the world’s biggest economy.
The problem is that too much money was borrowed against homes at inflated values, which meant that at the peak of the market, people borrowed 120 per cent against the value of their homes.