Few economic commentators make the connection between the increasing number of mortgage defaults and the fact that American workers work on average longer hours per week to earn less money. This is the result of creating a more flexible and precarious labour market as part of the employers' offensive . A large section of North American employees have seen a real drop in income over the last few years. The rise in interest rates imposed by the Federal Reserve since June 2004 has finally made mortgage repayments far too heavy in relation to household income. In fact the rise in payment defaults is not restricted to the real estate sector: it now concerns loans and credit cards .
Double standards
The August 2007 crisis had spectacular effects both in the United States and in Europe. "On Friday 10 August, in Europe and in the United States, an incredible thing happened: in 24 hours banks became too mistrustful of each other to do any mutual lending, forcing the central banks to step in massively. In 4 days, up to 14 August 2007, the ECB [European Central Bank] pumped nearly 230 billion euros of liquidities into the market." The US Federal Reserve acted likewise. The dynamic response of the US and European monetary authorities thus prevented multiple bankruptcies. From the 13 December 2007, in a joint action, on a scale never witnessed before, the ECB, the Federal Reserve, the Bank of England, the Bank of Canada and the Swiss National Bank (supported by the Bank of Japan) again pumped enormous liquidities into the interbank market, a sign that the crisis is not over yet.
The response of the US and European political and financial authorities to the liquidity crisis which began in August 2007 is a far cry from the response imposed on the Indonesian authorities by the IMF, supported by these same governments, at the time of the Asian crisis of 1997-1998. In the first case, the US and European authorities saved the banks by placing liquidities at their disposal, whereas in Indonesia, the IMF enforced bankruptcy on dozens of banks by refusing to let either the Indonesian Central Bank or the IMF itself lend them liquidities. This ended in a social disaster and a huge increase in the internal public debt because the debts of the failed private banks were transferred to the Indonesian State. Another glaring difference: to stem the crisis, the US monetary authorities have since August 2007 lowered interest rates (as they did between 2001 and May 2004), whereas the IMF demanded that the Indonesian government increase interest rates, a factor which considerably aggravated the crisis . Double standards for the North and South