The Credit Crunch January 9, 2009
Posted by sjama in Uncategorized.Tags: banks in trouble, credit crunch, Credit Default, International banks and Association, mortgage firms, The Credit Crunch
1 comment so far
The Credit Crunch can been geting out of hands. (I’m glad the derivatives market is not on the syllabus in my course BA fashion) I have to admit that 18 months ago I did not even know what it was; I had little idea about terms such as credit crunch and ‘Credit Default
Outside of banks and the City, I’m sure most people had little idea either. Yet, despite being a mystery to the wider public, the Credit crunch had
According to the International banks and Association) ballooned to more than $45 trillion by mid-2007. If it is possible to put any meaningful perspective on this figure,
18 months ago, I would never have to deal with this or write about it. The credit crunch has certainly been a shock to me and the global financial system.
USA, UK and European banks are responsible. UK banks will argue that without the US banks, the mortgage industry wouldn’t have collapsed like it has. Mortgage repossessions in the UK, although increasing by 40% in last 12 months, are still a small % of the total mortgage market.
The American banks and mortgage firms who made a rash of bad loans to people with poor credit who can’t pay back, can find little to excuse their behaviour.
Surely consumers should take some responsibility for taking out mortgages they couldn’t pay back. However, whilst this is true to some extent, I think it is stupid to blame consumers too much. Mortgage companies should know better.
The big question is whether government will bail out more banks in trouble. And by doing this will created moral hazard. – By preventing banks going under, have the governments given approval for future bad decision making? And what about the people who every day lose their jobs is there bail outs for them.
