What credit crunch/recession?

If everyone did not watch or listen to 24/7 tv/radio to doom and gloom reporting on finance would they:
Just go and buy that new car.?
Have that house Extension built,?
Move house?
Go on a long holiday?
If people did not know about it would they still spend as normal instead of hoarding away and having a lack of confidence?
Then everything would be fine?
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No money ad links thanks!

Thank you for your refreshing ignorance. I was made redundant from a financial institution today due to this very recession.

Let me explain how it works. The European banks bought 50% worth of Americas bad sub-prime debt. They bought it knowing that it was a dangerous long term decision but their investors demanded that their bank copies the other worldwide banks and make an enormous short-term profit. They had to do it to survive the climate.

Now the banks have closed ranks. No money is being loaned to any of its members unless its repayment is completely assured. To most borrowers (individuals, small business and major industries) this means devestation as many heavily rely on floating their business on credit.

Once this borrowing facility is gone, jobs start to go due to desperate cut-backs, businesses then go under. The flow of money has essentially stopped, the financial wheels have grinded to a halt.

So, unfortunately, it is intensely naive to think that it's all down to consumer 'lack of confidence' as they say on the news. Even if people spend right now, there will still ultimately be a cash flow problem for businesses.

Also remember, a massive amount of investment went into property and construction. As you know, construction has dried up and the value of properties has begun to fall. Therefore a huge volume of people are now stuck with decreasing assets.

It's a greedy world and this recession is merely a brief window into that greed. Despite heavy regulating, they'll will all make the same mistakes again in another few decades.

As for the media, they are doing what they always do, reporting a story about corruption and injustice which happens to effect us all. This is a big deal and the amount of media coverage is justified. Believe it or not, it is financial and governmental spin which is now placing the blame on the media. I assure you, the recession is very real.

Thanks.

Newspapers & the media are 'rocking the boat' in a big way .. our whole economy is built on Credit ..

I invite you to consider what might happen if you had to repay every penny you owe on your credit cards today, and your credit cards were then 'refused' at all retail outlets ... and the Cash Machines said "sorry, the Bank is a bit short of cash right now, come back later" ...

Consider also what would have happened if NR collapsed .. when a Bank goes under it calls in ALL it's loans .. if NR had called in all it's Mortgages it would have had plenty of money to give back to all it's Savings Account customers ..
... but what would you do if you had to pay off the outstanding Mortgage on your house immediately ??

Go to another Bank ? but none of them are lending right now ...

sorry - how does that make it fine? that just means that you are hiding your head in the sand. if you don't listen, how can you make a decision on things?

prevention is better than cure.

You are a genius I tell you! Why don't you buy crap you don't need, defer the payments and when your wages decrease, default on them. Let the banks take a hit. Do you know why there is a credit crunch/recession??? Because there is NO MONEY in the market to lend!!!! How will you buy the crap you don't need when no one has the money to lend you? Do you know why the sub-prime mortgage crisis is so gloomy? Because a 10% reduction in real estate value all across the country will take away $1.4 trillion out of the market! That is $1,400,000,000,000 in case you wanted to know how many zeros is a trillion. If the real estate crashes which seems likely, that means fewer old houses will be sold and fewer new houses will be built. Fewer new houses means less wages for electricians, plumbers, land-scapers, wood and cement guys and a whole lot more! Real estate is a choke point as such because it supports many other industries! Less wages mean reduction in spending, decreasing demand and causing a recession! Your solution is to spend more when you don't have it. Its called being Michael Jackson! Sure go ahead and spend the money you don't have and can't borrow. When the market corrects itself, then come back and gripe about it. Personally it doesn't affect me, the credit crunch i.e. because I don't live beyond my means. Bit now I have to bail out those who were dumb and stupid.

I hope you buy a new car when petrol prices are $4 a gallon plus. While you are at it, buy yourself a Ford or a GM. They can definitely use you right now because once this Wall St. bailout is over, Detroit is next followed by airline companies.

And while you are at it, increase govt. spending and run up deficits which your children and their children will pay. And give yourself a tax cut because you deserve one! And while you are at it, finance wars borrowing against Social Security fund and then wonder, hmm? Why is Social Security looking bad?

You know why credit crunch is bad? Because companies borrow money on short term loans to pay for expenses and other stuff all the time. When they are unable to do so, they will cut costs and that means you are out of a job because you are cost. What would that do? Raise unemployment! What will that do? Cut spending. So all those who think credit crunch is a hoax, when your employer lays you off because he is cutting cost because he can't borrow, then you will be crunched out.

Society is not built on credit but a steady flow of cash between institutions and consumers and back. When you run out of cash circulation because it is tied up in bad loans, what do you do? Print more money? There is this thing called inflation which will rise. Don't be like Zimbabwe. Those geniuses just printed more money when they ran out of it and inflation sky rocketed. If unemployment increases, I can assure you there will be many long holidays for many ppl!

Just so you know I haven't even begin to scratch the international implications on it! Half of your sub prime debt is held by international banks and when US institutions default on them, guess what? America's ability to borrow goes down! Her credit ratings suffer! Yes! the real estate boom was financed by China, Japan and Germany among many others. Where do you think they got the money to borrow from?

Agree totally.The whole thing is being blown out of proportion.Who's not going shopping for groceries because of the crunch.Right! no one.We all need to eat ffs

To some extent i think you have a point. A lot of this is media spin which becomes a self fulfilling prophecy. the media were looking for a story angle to replace last years 'green agenda' and the credit crunch seems to be it

I live in england, north of england sheffield to be exact. This credit crunch is total farce propaganda....im not going to flinch till i see a bread line.

Certainly, if more people thought as you do then recessions would not last as long. Of course, some sections of the media stand to gain money from spreading fear and confusion. THEY are not in recession!

Yes, exactly,
The media have got so much to answer for in this life, but they always back it up with ,
The public has right to know:::
That may very well be, but, don`t they realize that people are like sheep and if one does, they all do the same.
These idiots on news chanels have a lot to answer for,
Even the news channels are like sheep too;;;; ever noticed if you switch between channels it`s the same story at the same time ?
Why do i watch them???

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