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Financial World Upheaval!
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by: Dave Saltonstall
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Word Count: 444
The financial world today is in a state of upheaval. Most Americans, as well as most of the remainder of the free world, are feeling the negative effects of the carelessness and greed of many of the world’s largest banks. As a result, there is a crunch on credit which the world hasn’t seen before.
Property values are plummeting at an amazing rate, and people are finding themselves stretched beyond their means financially. Since the beginning of the housing crisis, people have had a feeling of unease regarding the stability of their jobs and their homes. As the housing crisis has continued to worsen, the large mortgage banks have taken a fall. Two huge banks collapsed under the weight and pressure of their own greed. This was because they were giving mortgages with ballooning interest rates to people who could not afford the payments in order to get themselves rich, now these people are suffering and many are looking to become debt-free through various measures...
Now, American taxpayers have been forced to bail out the nation’s largest banks by giving them enough money to stay afloat. In the meantime, people’s budgets became inflated when the housing market was on its way up. Because of the huge amount of sales from the world’s banks, consumers were under the impression the market was booming and their homes were worth much more than they actually were. Banks were giving these homeowners bigger lines of credit on their homes which were used to spend on whatever they liked. And now that consumers are being forced to pay it back, it is causing a snowball effect. Homes are being foreclosed on because homeowners can’t afford to pay off these huge lines of credit.
Consumer confidence is so far down; people are losing jobs by the thousands each day, and then are left without a means to pay their mortgages and their lines of credit. The banks have, as a result, gone from being too lenient with credit to being very strict with credit. People are finding it difficult to buy cars, or to open credit accounts. Many people are finding themselves in line at the store waiting to pay with their credit card, that their credit limits have unknowingly been lowered. It is giving Americans even less reason to spend. The financial world today is in a state of despair. Hopefully, with the peaceful transfer of power that America experienced on January 20, 2009, the state of the financial world will improve. Consumer confidence needs to head back up. It is a cycle in economics which is generally inevitable, but it is devastating nonetheless.
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