I) Causes of the crisisOn September 15, 2008, the American bank Lehman Brothers, which held more than 600 billion dollars, filed its balance sheet. It was by far the largest bankruptcy in U.S. history and the start of the greatest financial crisis ever seen. How can one of the biggest banks in the world go bankrupt? How can a bankruptcy in the United States make someone on the other side of the world unemployed? The answer is Collateralized Debt Obligations (CDOs) and it all started with new innovations in the financial sector combined with deregulations in the financial market. Many mathematicians and physicists began working in the financial market and created new financial products called derivatives after the Cold War. . These products allowed investment banks to speculate on stocks, currencies, commodities and even private debt and weather. The story might have turned out differently in 1998, when the CFTC proposed regulating the derivatives market. Instead, in December 2000, the U.S. government passed the Commodity Futures Modernization Act, which banned regulation of the derivatives market. On September 11, 2001, the American stock market collapsed after the terrorist attack on the World Trade Center and the Federal Reserve decided to lower the interest rate to fuel the market. This action took place at the same time as property prices had increased by more than 50% over the past 15 years. This action could be presented as an event when the United States simply advanced the crisis and made it even worse. In the United States, people took out more loans and real estate prices soared. Private loans have been packaged into so-called CDOs, which generate positive cash flow as long as creditors repay their interest rates. Investment Banks Divided......middle of document......d-elections-012509/?apThomas, Chad (2008) “Icelandic Buyers Splurge as Currency Woes Reduce food imports. Bloomberg.com, 10/13/2008. Available: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVFtDRGwcc50&refer=europeVaiglova, Leika (2009) “Icelandic PM resigns, elections to be held in May” IceNews, 2009-01-29. Available: http://www.icenews.is/2009/01/23/pm-of-iceland-steps-down-elections-to-take-place-in-may/#more-5432 Valdimarsson, Omar. R. (2013) “Iceland maintains the highest rate in Western Europe while the crown is stable” Bloomberg.com, 08/21/2013. Available: http://www.bloomberg.com/news/2013-08-21/iceland-keeps-western-europe-s-highest-rate-as-inflation-slows.html Whitford, Ben. “Iceland: an economic miracle?.” . Positive News Organization, June 18, 2013. Web. April 7 2014. .