Credit Crunch

The 2007 / 2007 Credit Crunch
The subprime mortgage crisis, which started in July 2007, developed into a Global financial crisis in 2008. The financial crisis was referred to as a "credit crunch" which was initially due to a loss of confidence by investors in the mortgage and loan markets in the United States. However due to the close interaction of banking institutions across the world the "credit crunch" resulted in a global liquidity crisis. The effects of the "credit crunch", when banking companies stopped lending to each other resulting in bankrupt or acquired banks, were so serious that the Bank of England, the European Central Bank and the United States Federal Reserve had to provide 'bail out' packages in order to make substantial injections of capital into financial markets.

Credit Crunch Definition
What exactly does the term 'Credit Crunch' mean? What is the Definition of the Credit Crunch? First of all instead of the term 'credit crunch' think instead of the terms like 'credit squeeze', 'credit catastrophe', 'credit emergency', 'credit calamity' or 'credit disaster' - all strong, emotive terms which at best are likely to depress people and at worse could panic people. So we became accustomed to the less worrying phrase 'credit crunch'. The credit crunch can be defined as the sudden reduction in the easy availability of credit or loans from banks or mortgage lenders resulting in far more stringent checks becoming conditional before bank loans will be approved. The 2008 credit crunch resulted in a reduction in the availability of credit - independent of any change in the official interest rates set by central banks. Both large corporations, small businesses and investors have suffered. The credit crunch resulted in a great loss of confidence in banks and investments with high cash withdrawals from investors seeking safe investments such as gold.