News.World-Estate.com - A delayed action bomb has ravaged the real estate markets in USA and Latvia.

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Gazing upon the article's title one may wonder if it is really reasonable to compare the world's economic superpower such as USA and a small European state - Latvia. From the economical point of view the difference is minor. Before the world's financial crisis Latvia's economy was far more stable than in the US.

At the time America was fighting several inconvenient wars which compromised Uncle Sam's economy. In the face of world's financial crisis News.World-Estate.com is trying to rationally compare the real estate markets in both countries.

It would seem that there's nothing more to conclude about the rampant crisis. But the in-depth analysis of the current situation could provide advantageous information for future use. The crisis is not permanent. After the recovery of financial markets the real estate will once again become a marketable commodity. Latvian experts believe that real estate prices will never reach its former heights. But to some purpose there is a saying: “Never say - never”.

It is now well known that world's financial crisis was caused by the real estate boom. The relentless strive for profit instigated by various banks and insurance companies just worsen the situation. The financial giants were never before so eager to obtain a profit. It was the biggest case of opportunism in the history of US.

The subject concerning loaning and insurance problem is widely discussed. Banks along with insurance companies provided loans even to insolvent clients. But further discussions on this mater are meaningless. The outrageous irresponsibility has disrupted the United States economy, previously stated to be the world's strongest. Now recession, depression and total financial failure is all that's left from former US economical potency.

Financial crisis has benefited to Barack Obama's success during the presidential elections. He promised economic prosperity and reestablishment of financial market. The President also claims that free economic market can no longer function properly and is a threat to economy. And that is why the head of state has instigated needed social reforms.

Upon gaining independence Latvia was tired of its socialist heritage and has enthusiastically accepted the principals of free economic market. After joining the EU, Latvia became one of the fastest growing economies in the community. Its GDP was rising ten percent a year. Latvia was even called the tiger of Baltic. Large investments from Western states were pampering Latvia's economy, but in 2008 it suffered the same fate as the US.

What could have happened to Latvia's economy? Same as in the US the irresponsible activities of various banks were largely at fault. After joining the EU in May of 2004, Latvia's real estate market has experienced the fast growth of prices. In the end of the year the real estate prices were up by thirty percent. It was but a beginning.

In the next few years the banks of Sweden, following the footsteps of their greedy colleagues in US, started their mass loaning campaign. The loaning process turned Latvian real estate market in to a delayed action bomb. It exploded in 2008 incapacitating Latvian economy and government.

Latvia was forced to apply for International Monetary fund's and European Council's assistance. Without additional aid Latvia would have had to devaluate its national currency. Finally the government of Sweden has hastened the IMF's decision in reference to the fact, that in the worst case scenario Swedish banks would have also suffered large losses. The act of Swedish government has exposed the true nature of the relations between the EU states. The purpose of the ties linking different states was not partnership (as officially declared) but merely a chase for profit.

The situation in both countries shows that the system itself is not at fault. The ones to blame are rather the system's participants who simply strive for profit. The irresponsibility of insolvent bank clients has also led to current world's economic condition. The citizens in both US and Latvia have desired to obtain a habitat so badly, that they became the unfortunate victims of real estate boom or the hostages held by various banks.

Maybe the financial crisis will become a motivation for people to think logically and realize that there are no more secure workplaces in the modern world as it used to be in the Soviet Union. Conversely to Barack Obama's statement, there are no guarantees that the state will help everyone in need. Maybe now the people will consider the decision to take loan, when their possibilities to repay equals to a chance in wining a lottery.


For more information please contact:

Simonas Rudaminas
WORLD-ESTATE
World-Estate.com project manager
Mob.: +370 656 88777
Email: info@world-estate.com
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