The Sub-Prime Mortgage Crisis in Usa and Poland

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Abstract
The sub-prime mortgage crisis of the United States has grown into a global recession in a few years. As the financial markets themselves face the threat of total dysfunction, governments and policy makers across faced a similarly hard decision: spend huge amounts of public money in hope of repairing the damage done or let the markets "work it out" on their own. Keynesian economics started to bloom again, fiscal and monetary interventions could be witnessed across the globe. In this paper we focus on three large key areas of interest while trying to answer one important question: What can be learned of the recent years? While we try to answer that question we examine three larger topics. First of all, how the current financial and economic crisis started. What were the major underlying causes of the financial breakdown? Was it avoidable or even preventable by the proper actions of either economic actors? In the second part, we examine what path did the United States of America choose to avoid further troubles. How did the government and the Federal Reserve System acted during this critical period? What monetary and fiscal policy goals were followed and which ones were neglected for the sake of "keeping the economy running"? In the last part we turn our focus to a distinctively different country, Poland. As it is different by its size (both in terms of socio- geographical and economical terms), it similarly acted differently during the crisis. As the only country of the European Union which could produce economic growth during the hardest years, we try to understand what made this performance possible.

Introduction
When I first had to face the problem of choosing a proper thesis topic in my sophomore year all I knew it has to be something I am interested in. As semesters and months passed by, an interesting topic rose, the sub-prime mortgage crisis of the United States. Of course I did not know at that time what it really was, or how to properly call it but it surely made me wonder how can savings of a lifetime disappear in mere days. As the internationally acclaimed American sitcom South Park put it: "Poof... and it`s gone!"

As one of lucky participants of the Studies in Trans-Atlantic International Relations program, I would have liked to have a thesis that embrace all three participating countries: the United States of America, the Republic of Poland and the Republic of Hungary. During the process of writing this thesis however it became clear, that not all countries can be examined in proper depth due to the tangible and intangible constraints of a such paper. After careful consideration I have decided to omit Hungary from current thesis. I felt, that as the source of the sub-prime mortgage crisis, the United States cannot be the one left out if one wants to understand how it all began. As to picking Poland against Hungary I have very simple reasons. Influenced by

my studies at the Cracow University of Economics (Uniwersytet Ekonomiczny w Krakowie), and

spurred by the excellent economic performance Poland has shown in recent years I decided not to
wade into the frail topic of Hungary, leaving it for another time, maybe another paper. Most of 5 | Page

the research of this paper was concluded in 2010 and 2011, and as such most recent developments are not reflected in it.
I found the coincidence interesting, that both nations hold the eagle in high places. Both coat of arms represent an eagle: the bald in the case of the United States and the white in the case of Poland. It is known, that eagles have an unique way of escaping the storm. When it is coming, they simply use its winds to soar above the dark clouds. I found that the picture can be broadened in my thesis, examining how these two eagles fared in the storm. This paper consists of three main parts. The first part tries to shed some light on the roots of the financial crisis, based on evidence mainly presented in the report of the Financial...
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