What the credit crunch is
If you needed a loan, whether you were an individual, a small business or even a bank, it was increasingly hard to get. For many years, credit was freely available we were all given the chance to be big spenders, particularly in Britain and the. Credit, crunch cereal advert. The credit crunch would reduce investment worldwide, an economic slowdown in developed countries would weaken demand for commodities and manufactures, remittances would fall and tourism would suffer.
But what's the fun in that? Some blame the mysterious Captain Crunch for the current financial crisis. It is in these areas where house prices are now falling rapidly. In other words, mortgage companies borrowed to be able to lend mortgages.
Any global credit crunch would undoubtedly have an impact on financial markets in the region, as was the case in 2008. During the upward phase in the credit cycle, asset prices may experience bouts of frenzied competitive, leveraged bidding, inducing inflation in a particular asset market. Clean yourself up a little more and you can charge more because you're "fancy." Learn the streets.
September 2008 : Investment rapers, the Lehman Bruvas announce they have lost almost.9 billion in bad drug debts. This affected many firms who had been exposed to the sub-prime lending. It also meant that the loans were no longer secured.
Learn the skills you need to know. October 2008 : Gordon Brown leads the world in the brilliant(?!) new idea of borrowing billions to bail out/buy banks. Mortgages have become more expensive.
September 2007 : German corporate lender IKB announces a 1bn loss on investments linked to the US Optimus Prime market. It has a nice satisfying ring. Often it was very difficult to borrow any money at all.
A search in the Guardian newspaper reveals that 'credit crunch' was mentioned just once in January 2007. For example, biotech companies rely on high risk investment and are now struggling to get enough funds. In Japan, news breaks that the Origami bank has folded, the Sumo Bank has gone belly up, the Bonsai Bank planned to cut branches.
Many blame the global credit crunch on the actions of banking "Fat Cats" and their unwise investment in the oil rich nation of Mordor, subsequently invaded by George W Bush in 2003. 2 Other causes can include an anticipated decline in the value of the collateral used by the banks to secure the loans; an exogenous change in monetary conditions (for example, where the central bank suddenly and unexpectedly raises reserve requirements.
But credit crunch, despite its nice friendly sound, has a sinister meaning. Risky mortgage products like 125 mortgages have been removed from the market.
Many of these mortgages had an introductory period of 1-2 years of very low-interest rates. A credit crunch (also known as a credit squeeze or credit crisis ) is a reduction in the general availability of loans (or credit ) or a sudden tightening of the conditions required to obtain a loan from the banks. Bill Gates on the credit crunch Credit Crunch: Only purchasable through bad loans. Contents What Triggered the Credit Crunch?