Welcome to Articles@Peuan
The Financial World Today
View PDF | Print View
by: stickystebee
Total views: 47
Word Count: 369
We have all been hearing and reading a lot of information about the financial world of late. We hear a lot about global recession, the credit crunch, companies filing for bankruptcy, subprime mortgage crisis, and many pieces of other related news. Where is the financial world heading to from this point onwards is the question on everybody’s mind.
A recession is generally a slowdown in a nation’s economy for a prolonged period of time, usually for at least six months. The reasons for a recession could be as a result of less consumer expenditure, falling stock markets, increase in unemployment, reduction in factory production, a reduction in personal income, etc. A credit crunch, also known as a credit squeeze, is a reduction in the availability of credit or loans in the market. Credit crunches are usually considered to be an extension of recessions. Banks and other financial institutions are wary of companies going bankrupt or defaulting on their payments and hence do not give out credit too easily or charge very high interest rates. When banks perceive a greater risk in the market, they usually raise their lending rates to offset this risk. When a credit crunch is coupled with a recession, it leads to many corporate bankruptcies, making it very difficult for the economy to recover. The effects of a credit crunch on any country could be disastrous.
In the US, companies with a very strong background like The Lehman Brothers have filed for bankruptcy and many companies have shut down plants and stores thereby leaving thousands of people jobless. When people don’t make money, they are unable to pay up their credit card dues and their mortgage dues, thereby defaulting on their payments. Experts say that the US may be now moving into the next phase of subprime mortgage crisis – the credit card crisis. The credit card crisis could mean more defaults, lower spending limits and higher interest rates for the 75% Americans who have credit cards. At this time of uncertainty, it is extremely important for all to spend wisely, employ good debt management and save most of the income. Prompt payments will not only ensure no penalties, but also peace of mind.
About the Author
The credit card crisis could mean more defaults, lower spending limits, an increase in people trying to consolidate debt and higher interest rates for the 75% Americans who have credit cards. At this time of uncertainty, it is extremely important for all to spend wisely, employ good debt management and save most of the income.
Rating: Not yet rated