Is the Credit Crunch over?

Aug. 25, 2008 - PRLog -- Some media reports might be leading you to think the credit crunch is lightening, here in the U.K house and retail sales were up in July as were mortgage approvals is the credit crunch nearly over?

It seems the Credit Crunch is not over yet

In the US, the Federal Reserve has recently unveiled its latest views on what's happening with American borrowers at present; and it's not good news.

The report from Federal Reserve doesn’t make happy reading apparently as it suggests that the "impact of the credit crunch is still intensifying" which, according to Capital Economics, "has become even more broad based. Banks intend to tighten lending criteria further in the third quarter for nearly every conceivable type of loan, as what started initially as a squeeze on mortgage lending is now affecting all forms of borrowing."

Another trusted financial source of opinion is Oppenheimer's bank researcher, Meredith Whitney. She was among the first analysts to ring the alarm bell about the subprime mortgage crisis in America in October 2005. At that time, she forecast that there would be "unprecedented credit losses" for subprime mortgage lenders and she was right.
Last week, Whitney told Fortune magazine that banks aren't cutting costs or loan portfolio losses fast enough, and that lenders need to "get real" about mortgage-related debt valuations.

"I don't think we're near the end of write-downs," Ms Whitney told Fortune, "so I continue to see capital levels going lower, capital raises diluting existing shares further, and stocks going lower." So she’s basically saying that banks are going to be writing off a lot more money than they anticipated and trying to claw as much back in as they can… which is pretty much what the Federal Reserve are saying too.
Capital Economics summed up the gloom saying, "12 months into the credit crunch, the worst still lies ahead".

So with job losses, rising inflation and rising oil prices, we could be in for a recession on a par with that which we experienced in the eighties. The Credit Crunch is not over yet follow all the latest credit crunch news and get great personal finance tips visit www.creditcrunch-uk.org.uk.

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