Causes and effects of the Credit Crunch

Causes and effects of the Credit Crunch The words credit crunch have been all over the financial headlines in the UK, including the effects that has hit the financial markets both in the UK and in other parts of the world have been reflected in a number of ways, affecting both financial institutions(banks) and consumers. Several authors and regulators have showed their different views about the causes and effect of credit crunch. Many economists studying the credit crunch explain it as a cyclical fall in credit demand. What is credit crunch? Bernanke and Lown (1991) define a credit crunch as a decline in the supply of credit that is abnormally large for a given stage of the business cycle. Credit normally contracts during a recession, but an unusually large contraction could be seen as a credit crunch. From Investopedia; credit crunches are usually considered to be an extension of recessions, also making it impossible for companies to borrow because lenders are scared of bankruptcies or defaults, which results in higher r ates. The consequence is a prolonged recession (or slower recovery), which occurs as a result of the shrinking credit supply. The credit crunch is also known as the credit crisis and is represented by a reduction in the general availability of loans which leads to sudden tightening of the conditions required to obtain a loan/credit from banks. Also, a broader definition of a credit crunch has been summarized by the Council of Economic Advisers (1992):A credit crunch occurs when the supply of credit is restricted below the range usually identified with prevailing market interest rates and the profitability of investment projects. Amongst the things affected in the UK as a result of the credit crunch are: Liquidity: The atypical flow of money looking for a home went into the West’s economies. Trade surpluses were recycled in the early part of the decade. This stimulated the â€Å"search for production of labor† and, in turn, the uncertainty in price of risk as investors imagined the high returns they were offered were safer than they proved. E.g. In September 2007, during the financial crisis of 2007-2010, the Bank had borrowed from the Bank of England a sum of about  £13 billion, a liquidity support facility, this showed that the total amount was a loss of deposits. which followed problems in the credit markets caused by the US sub- prime mortgage financial crisis. And it was of great shock that could be avoided to the bringing down of Northern Rock was a risk. However, the result of two unsuccessful offers to take over the bank, not being able to achieve the repayment of taxpayers’ money. This made the Government immediately take possession, away from its shareholders. Also reported cases showed some shareholders had their life savings in the shares, which were taken from them. Sub-prime lending: This covers different types of credit, including mortgages, auto loans, and credit cards. Sub-prime loans allows the opportunity for borro wers with a less-than-ideal credit record (considered as people with bad credit history)to be home owner. Some of theses lenders may use the credit in purchasing homes,sometimes in financing other types of spendings e.g. paying for living expenses, remodelling a home, or even paying down on a high-interest credit card or purchasing a car. Sub-prime lending (mortgages to be precise)provides a method of â€Å"credit repair†. Also with the interest rates low and liquidity in plentiful supply, financial institutions and businesses did not bother with adequate checks before, lending billions, who they realise could not afford repayments when some of this types of credits came with high interest rates, increased fees and costs which was a major cause for credit crunch.

Book response Essay Example | Topics and Well Written Essays - 1250 words

Book response - Essay Example The poems are easy and full of affective yearning, with which any reader can identify. Further, Dickman’s theme oriented composition makes it interesting for readers to discern crucial life lessons and get inspired to make amends where necessary. One predominant theme in All American Poem is â€Å"scraping for joy†, which this essay seeks to explore in greater detail. The first poem in Dickman’s collection, which explicitly addresses the theme of scraping for joy, is Slow Dance. The basic meaning of this phrase is that, people must strive to derive joy from every action they take or every experience they go through. Just like the poem title suggests, life should be a slow dance, where one soaks in every moment of happiness and avoids taking for granted the joyous aspects of life, however meager. Dickman’s poem is infused with a sense of pleasure and expectation, as one skims through the verse line by line. There is a promise of hope even in the most unexciting or demoralizing everyday activities. The poem is also emphatic on the need to eagerly grasp the relatively few moments of slow dancing with exquisite unfamiliar persons. Such acts in essence, constitute cheating life or coping with aspects of life that might seem too difficult or painful to handle. Dickman’s detailed description of ritual of slow dancing gives one, as a reader, insight into the need to live life easy and take in all the little joys. By drawing a reader’s attention to the purported mundane moments of life, and comparing these with the happy times people would enjoy if only they took the time, the poet is successfully convincing on the issue of scraping for joy. For instance, he points out mowing the lawn, making another person suffer, suffering from insomnia and even dying, as some of the negativities of life. The poet establishes juxtaposition of these negative aspects of life, with positive ones like the hope of an almond grove in pitch darkness,

Sex Education Assignment Example | Topics and Well Written Essays - 1000 words

Sex Education - Assignment Example As the essay declares  the information that is supposed to be presented within the scopes of sex educational process must contain the following items: sexual development and reproduction, means of contraception and other information about birth control, relationship dynamics and norms, and different kinds of sexuality.  It is difficult to say which aspect of sex education is the most needed for nowadays society, as all of them concern the most problematic personal issues that appear among people of all countries.This paper stresses that  it is important to say that sex education plays crucial role for the society in general, because it has the goal to reduce the rates of early pregnancies which may lead to increase in the quantity of abandoned children, and also it prevents expansion of such dangerous sexually transmitted diseases like AIDS and HIV.  Being aware of the possible outcomes of unprotected sex makes young people more attentive concerning their sexual relations; mo reover, apart from becoming conscious of the means of contraception, they may even refuse having early sex and be more careful in relationships in general.  The point is that, according to some psychological researches, the roots of understanding of the concept of sexuality and formation of sexual identity happens in childhood, when a person observes one’s environment and comes up to certain understanding of sex.