The Credit Crunch And Its Impact And The Policies For Uk Government Need To Implement.

2336 words - 9 pages

The Credit Crunch and its Impact and the policies for UK Government need to implement.CONTENTSPage NumberTERM OF REFERENCE 3WHAT IS CREDIT CRUNCH? 3HOW AND WHY DOES IT HAPPEN? 4 - 6THE IMPACT OF CREDIT CRUNCH. 7 - 8WHAT ARE THE POLICIES FOR UK GOVERNMENTNEED TO IMPLEMENT? 9 - 13REFERENCE 14TERM OF REFERENCESThis report will explain what the term "credit crunch" and what the background and causes that led to the problem. Will also advise and explain what policies that UK Government need to implement in order for the British economy to emerge from the recession caused by the "credit crunch".WHAT IS CREDIT CRUNCH?The term "credit crunch" is used to describe a sudden cut in availability of loans or credit that include mortgage, credit cards, and inter-bank lending or when the cost of obtaining loans from the bank has suddenly increase.The credit crunch makes it impossible for companies to loan because of the shortage in the availability of loans or credits from the banks and other lenders who are worried of rising bankruptcies and mortgage defaults. The banks or other lenders want to minimise their risk resulting by increasing the cost of obtaining the loans (i.e. charging higher interest rates) or reject all loans except for safest loans. During credit crunch, many businesses may have trouble with their cash flow causing them to lay off their employees or even close down due to insufficient funds resulting from inability to get loan or credit.HOW AND WHY DOES IT HAPPEN?Background and causes:The credit crunch has been blamed for the more general economic downturn and everyone around the globe has been affected by it. The most obvious effect would be the slow-down in the housing market.It seem that the cause of credit crunch is being blamed on thousands of borrowers who took out loans that they could not afford and fail to pay for in the long term, eventually abandoning the payments altogether. This leaves lenders having debts on trillions of dollars sitting in their books.It believed that the credit crunch that we are been experiencing is cause by the ill lending decision making by the financial institution itself, where mortgages loan were being offered to people who really did not considered qualify for a mortgage (i.e. high risk of default).To understand what had happen, first we need to know how the mortgages are funded and how they are funded. The financial institution got too much money available due to people depositing money into their saving account. The banks have keep certain percentage of the saving money as 'capital reserve' and the rest are use to make investment and to loan it out to people and organisations in order to make profit by charging interest on all the money they lend.The financial institutions generate in more creative ways and strategies of finding more and more potential borrowers, and had made number of loan increased with less regard to ability to repay. People who were considered a "good" risk already got a financing /...

Find Another Essay On The Credit Crunch and its Impact and the policies for UK Government need to implement.

Fiscal and Credit Policies Essay

1513 words - 7 pages minimum wage to around 17,943,189 families but there it has been criticized because of its flawed implementation and poor monitoring. It has not been successful for quite a long time now because of increased corruption and financial deficits. 3. Agricultural reforms- Around 21% of agricultural produce contributes to India’s GDP while 61% are employed under agricultural work. Therefore, our Government makes sure that the agricultural work goes on

how to implement chosen strategies for Nestle by comparing the roles and responsibilities for strategy implementation between Nestle and Starbucks

4301 words - 17 pages resource requirements to implement a new strategy for NestleFor all the company to do their bussiness and implement the new strategy, they all need to access resource. Neslte is not expect. For example, to planing the new store in somewhere, company need to have resource such as employee, cost and time. To be more understand about resource requirements to implement a new strategy in case of Neslte, the table below will show the key activities to

The level and types of unemployment that existed in the UK in the post war decades. How successive UK governments adopted economic policies to reduce unemployment.

1881 words - 8 pages multiplier effect. This cycle could continue and if necessary the government could counter its effects by decreasing demand by increasing inflation to curb spending.5.0 Conflict of ObjectivesThe economy as a whole tends to follow a cycle of strength followed by phases of weak or negative growth or recessions. It is practically impossible for a government to achieve in all their economic objectives at once. The major conflicts of objectives usually arise


953 words - 4 pages should oversee. However, statistics show obesity costs are soaring, affecting the National Health Service and industry. If government ignores the impact on the economy then they may be seen to be ignoring their responsibilities. Previous Government strategies introduced to tackle obesity have included teaching children about healthy food choices, for example, the national fruit scheme and five a day health promotion and encouraging children

The following essay analyzes, synthesizes, and expounds upon two articles appertaining to the variable criteria requisite to enter major Literature's exclusive Canon, and the need for its reform.

1924 words - 8 pages is inconstant. Tompkins clearly shows this as she points out that the people in the 1830's liked his literature for its "transparency of style, and ability to invest the common elements of life with spiritual significance" (139). Conversely, today's critics notice and appreciate his "symbolic complexity, psychological depth, moral subtlety, and density of composition." Different strokes for different folks - such a hackneyed expression perfectly

The Need for Positive Migration Policies in the United States

2245 words - 9 pages contributing to American society. Although remarkable and touching, stories like this are now very unlikely in today’s society. Changes, new found difficulties in the United States immigration policies, and the government inability to make changes with changing times has made this processes nearly impossible. Ying Ma and her family applied for immigration in the late 1970s, while living in an apartment with no hot water, no refrigerator, no telephone, and

Essay explaining one major challenge facing organisations in the coming decades and its implications for the kind of leadership and negotiation capabilities that they will need to develop

1594 words - 6 pages who need to address the situation by taking into account, its employees.A leader could address this by pursuing a transformational leadership style. According to Burns, all leadership behaviour is either transactional or transformational. However major technological change will call for transformational leadership. Reason for this is that Transactional behaviours are "largely oriented toward accomplishing the tasks at hand and at maintaining

Analyze how the policies and decisions pursued by the government to George III brought about the Colonial War of Independence.

1846 words - 7 pages the points of interest but rather the preface to the entire treaty. The treaty stated that the point of the Treaty lay out before them was to "forget all past misunderstandings and differences." The very first part of the document stated all that needed to be said. Both parties involved would forgive the past transgressions and would move on. The need for further bloodshed, hatred, and war had diminished and been deemed unnecessary after eight

Why and How We Need to Improve the Environmental Impact of Automobiles in the US

3820 words - 15 pages accounts for the vast majority (over 80 percent) of miles traveled on our nation’s roadways and three-quarters of the CO2 emissions from ‘on-road’ sources. The ‘carbon footprint’ of daily travel for an individual household is based the types of vehicles that household owns, the fuel efficiency, and the number of miles traveled.” The United States cannot be a leader in the movement against climate change without trying to preserve this earth and its

The Segregation and Assimilation Policies in Relation to the Impact They Had on the Aboriginal Family Lfe

2040 words - 8 pages 2. Compare and contrast the segregation and assimilation policies in relation to the impact they had on the Aboriginal family life. Aboriginal family life has been disrupted and forcibly changed over the last two hundred years, as a result of the many segregation and assimilation policies introduced by Australian governments. Often a combination of the two was employed. The policy of segregation has impacted upon Aboriginal family life, for

The Global Financial Crisis and Its Impact

2217 words - 9 pages 1.0 The Global Financial Crisis and Its Impact The recent Global Financial Crisis (GFC) initially began with the collapse of credits and financial markets, which caused by the sub-prime mortgage crisis in the US in 2007. The sub-prime mortgages were given to high-risk lenders (with bad credit history) who were in danger of defaulting, which eventually caused a global credit crunch, where the banks were unwilling to lend to each other. In

Similar Essays

Evaluate The Impact Of Key Policies And Legislation Enacted By The Australian Federal Government During The Vietnam Era.

1409 words - 6 pages The Vietnam Era (1954-1972) was a very tense period for the entire Western world as the threat of Communist expansion in South East Asia had arisen again, the second time since the Korean War. Australia was no exception. It was one of the countries that had an exceedingly high threat of falling to the domino theory due to its proximity to the hot spot called Vietnam. So it was no surprise that the Federal Government imposed various policies and

The Impact Of The Changing Government Policies Towards Aboriginal People Overtime.

976 words - 4 pages to change dramatically throughout the 20th Century. Through that period of time, the Australian government has created and implemented policies concerning the Indigenous population, decisions which had all been made for their own good. These policies have included Protection, Assimilation, Integration, Self-determination and finally, Reconciliation. It is now clear that none of these policies have actually made the condition of Australia's

The Credit Crunch Essay

2695 words - 11 pages In the late 2000’s what was known as the “Global Recession” or “The Credit Crunch” occurred. The only financial crisis comparable to the recent 2008 United State recession was the Great Depression, which occurred in the 1930’s. The financial crisis of the late 2000’s resulted in the downfall of the largest financial institutions as measured by market capitalization vales. The situation created the need for governments and regulators to bailout

Some Causes Of The Credit Crunch

1020 words - 4 pages and causing crisis. Thus, this situation is like the up and down of economy. It happens and every economy faces it. It is important that new policies are drafted. It is important that government take necessary steps. This will help to face when such a situation arises in the future. It is important that such situation is dealt cautiously. Policies need to be developed to deal with it and steps taken to come out of credit crunch. Works Cited