About
About the Credit Crunch
Up until mid 2007 the western world was living on credit and credit cards, house prices were soaring consumer confidence was high as was consumer spending.
Then the credit crunch started, what started the credit crunch? Over borrowing from many consumers and over lending from many banks. In America there was a large sub prime lending market, rocketing house prices made banks over confident with they’re lending to people with bad credit history and on low incomes. The banks plan was to lend the cash they knew if people could’nt pay they’d simply reposses the property and get their money back, that was their plan anyway.
Banks from all over the world began investing in this subprime goldmine, peoples personal debt started spiralling out of control and they began defaulting on loans and mortgages.
To cut a long story short many banks are now in great difficulty, one in the U.K has been taken over by the government, money is hard to borrow. House prices are falling because no one can afford them and fuel costs are soaring.
This credit crunch looks set to stay for a long time and the financial outlook for many is worrying.
