Effects Of The
Credit Crunch Spread
Like Wildfire Worldwide
We are truly a global economy.
What may have started out as a credit crisis in the United States is also shared
in other parts of the world. Housing slumps and the rise of costs for basic necessities
the credit crunch is felt globally. Consider yourself
lucky if you pay less than $4.00 per gallon for gas. Yes to Americans that is
an outrageous sum of money, but in the UK one litre of fuel costs a whopping $2.15
(at 05/09/2008). This equates to approximately 3.785 litres to one gallon!!! So
for comparison purposes say you have a five gallon gas tank. It would cost you
$40.70 to fill up your vehicle. That is $8.14 per gallon of gas. And boy are you
in trouble if you have a long commute to work and you have poor gas mileage. The
housing market has affected Europeans much the same way as Americans too. Lending
institutions, back in 2002, were offering one of the lowest interest rates for
adjustable rate mortgages. Thus allowing persons with less than perfect credit
the ability to obtain loans for real estate purchases. The possible foresight
of it being a wise investment flourished into the idea to sell once equity was
built up and the market value rose but before the interest rate increased. However,
as time passed and the real estate market plunged and the interest rates started
to climb, homeowners began to experience trouble meeting their monthly mortgage
payments. Thus avalanching to a rise in foreclosures and banks becoming more selective
to whom then lend. Finally,
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Along
with real estate and fuel prices, the expenditure at the grocery store has also
taken Europeans by storm. Similar in experience to the Americans, eking by on
the most basic necessities such as meat, groceries and personal items, seems to
be the status quo. No longer are consumers able to splurge on choice cuts of meat
when lesser quality purchases means greater savings at the checkout line. Also
a cost saving measure is buying bulk for some items that are used on a consistent
basis; for example laundry detergent. The credit crunch is felt globally as it
forces shoppers to make more financially savvy, if less than desirable purchases. Consumers
are not the only one’s who have experienced the ramifications of the global
credit crunch. The retail industry has also felt the pinch of a tightening economy.
While there will always be shoppers, the sales for local, regional and even online
shopping has greatly declined. Retailers are trying to entice people to buy via
means of storewide discounts and sales events. In addition
to the loss of retail sales the auto industry has also been dealt a blow of lost
sales. This sting to the industry resulted in countrywide layoffs. A paradox begins
as the workforce decreased. A seemingly endless cycle of identical cause and effect. All
countries do not feel the global credit crunch in the same ways. However it has
produced a ripple effect, placing an even greater burden on today’s society.
With housing, food and fuel at the forefront of the crisis the peoples globally
continue to struggle to make ends meet.
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