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