Credit crunch can be thwarted by sound efforts on the part of the people who brought this credit crisis about in entirety. This would mean that these people are asked to do things against the norms which have already made the rounds in the last year or so. There is a need to address the issues that the credit crunch has brought with it since these have magnanimous effects on the world, and not just financial institutions alone.
The economic climate all over the world has changed and that too in a very negative way. The manner in which states have been able to change the behaviors of the people from a futuristic angle comes directly under the aegis of moral hazards. The solution for the same is to bail out the banks so that these could avoid the short term issues and problems and hence benefit the common man. There must be stop gap solutions so that people do not suffer on the same count, however little was done to address the issues that plagued the life of commoners. The financial companies have a responsibility to meet the needs of the people and to regulate the banking sector and the government cannot be allowed to have its own under such extreme circumstances (Pettinger 2008). The credit crunch came about because banks made loans of serious amounts and had little respect for the proposition of repaying. The mortgage loans were increased since a number of different ways were devised and hence these strategies did not benefit the common man when the credit crunch came down quickly. The homeowners are now at a severe risk of mortgage defaults and hence they cannot fathom something sane to happen within their respective ranks. The entire financial system of the world has suffered due to the steps undertaken by the people who are at the helm of affairs within these financial institutions. The consumers for mortgage have suffered on the same count, if not less. The sales pitches given by mortgage people were very aggressive and this led ...
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(Credit Crunch Essay Example | Topics and Well Written Essays - 500 Words - 4)
“Credit Crunch Essay Example | Topics and Well Written Essays - 500 Words - 4”, n.d. https://studentshare.net/miscellaneous/381878-credit-crunch.
This was because of the structural nature of the crisis which prompted responses from the countries in different manners since the economic structure of each country varies due to the way in which the economies are ordered (Vogt & Leuschel, 2011, 15). This paper considers the responses of two countries, Russia and India, which have markedly different economies, to the global financial crisis.
The major causes could be termed as excessive liquidity, excessive lending, excessive leverage and excessive risk taking by the banks and other financial institutions. The global credit crisis posed a greater threat to UK Economy. It is estimated that almost 20,000 people will be losing their jobs alone in London's Financial Service Industry.
The result is greater market fluctuation, which can lead to negative effects, such as more expensive mortgages, problems for pension savers, and even bankruptcy. Apart from that, credit crunches can occur even without an evident recession.
"Credit crunch" has been the most commonly used new term over the past few years.
Credit normally contracts during a recession, but an unusually large contraction could be seen as a credit crunch. In their analysis, Bernanke and Lown compare the contraction in credit during the most recent recession to those in the previous five recessions.
Treasury secretaries and finance ministers worked late into the night looking for a way to grease the wheels of commerce and get the credit flowing again. The greatest economic minds in the world were at a loss to explain the crisis
The author states that the current financial problems are caused mainly because of the improper lending habits of banks. Banks were ready to satisfy all the customers who approached them for loans without any investigation about their financial abilities. Interest rates were cut down and the repayment periods were increased by the banks.
dwardian summer" of prosperity and tranquillity and the trench warfare of the credit crunch - the failed banks, the petrified markets, the property markets blown to pieces by a shortage of credit” (Special report: Credit crisis - how it all began, 2008). The major reasons for
There have been job cuts, firings and downsizing – all of which have hampered the basis of sanity within the world’s domains. It goes to show that credit crunch has played havoc with the world order and the people who have brought the globe
In such condition, the connection between the interests rates and the availability of credit has unconditionally changed in such a manner that either the loan is fundamentally less than any quoted formal rate of interest or there stops to be a precise
10 Pages(2500 words)Essay
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