Co-Plan.Net:Business News » credit crunch http://co-plan.net Economic Outlooks |Stock Market |Financial |Earnings |World Market Tue, 22 May 2012 03:32:31 +0000 http://wordpress.org/?v=2.8.6 en hourly 1 Credit Crunch? No Problem! http://co-plan.net/credit-crunch-no-problem/ http://co-plan.net/credit-crunch-no-problem/#comments Sat, 07 Aug 2010 19:33:06 +0000 admin http://co-plan.net/?p=937 We all know there is an economic crisis—the worst recession ever since World War II, but what does it al mean? Should we be hating the bankers and buying cheap houses? Here are four thing you absolutely need to know inorder to survive this tough time.
1. What a recession is.
The definition most used is when a country’s econmoy shrinks for two quarters in a year in a row. By economy we mean the GDP of UK, which is the combined value of everything sold. The UK’s econmy shrunk in the last two quarters of 2008, and in the first quarter of 2009. That makes three. On that basis, we are in a recession. we are not there yet, but we are too close for comfort. Since one mark of a depression is a very high rate of unemployment, we need to prevent that.

2. When it will end.
Though many people expect the recession to end in early 2010, most city experts think that is too optimistic. The best guess of when it will finish is sometime next year, and even then it will take a while for business to recover and start creating jobs. So it is best to hunker down and be cautious for the next 18 months.

3. Why the banks are in so much trouble.
In the summer of 2007, some of the world’s biggest banks, suspecting a number of them might be in trouble, stopped lending to each other. Banks lend to other banks all the time, often for as little as 12 hours or overnight. Those short-term loans and the deposits customers make are the banks’ only source of money. If those dry up, the banks don’t have any to lend to people who want to buy big things, like houses or cars. Then the public don’t buy those big things, which means estate agents and car dealers make less money, which in turn means they don’t buy closthes or go out, which leads to retail staff and pub staff being less well-off and on and on…

4. If the government can stop it.
They are trying. Interest rates have been kept down to encourage spending and get inflation up again, and banks have been instructed to keep lending. But businesses scrabbling to cut costs will lead to a lot more unemployment yet, meaning more people will need benefits. We’ll have to pay more tax to cover that.

]]> http://co-plan.net/credit-crunch-no-problem/feed/ 0 Smaller Companies Face Pain as Lending Continues to Shrink http://co-plan.net/smaller-companies-face-pain-as-lending-continues-to-shrink/ http://co-plan.net/smaller-companies-face-pain-as-lending-continues-to-shrink/#comments Mon, 14 Sep 2009 07:32:39 +0000 admin http://co-plan.net/?p=121 The credit crunch in Europe worsened during the summer as corporate bond finance issuance failed to plug the gap left by a sharp contraction in bank lending.
Morgan Stanley, which has compiled lending and issuance data from central bank figures and Dealogic, warned that the scant availability of bank credit would penalize smaller companies that had no access to bond market.
Net lending by banks went further into negative territory in July as companies paid back more loans than took out new ones. Loans outstanding contracted by a net €25bn in the month, the fifth successive month of increasing supply shrinkage. At the same time, there was a retreat in recent record corporate bond issuance. Bond issuance in July declined for the first time ever since March, by €20bn month-on-month to €27bn, although bankers are convinced that the fall in issuance was only seasonal.
Bankers said the July trends had continued into August and would hit smaller companies hardest. Huw van Steenis, Morgan Stanley banks analyst, said that as Europe’s commercial banks de-lever, lending is likely to be squeezed.
According to Morgan Stanley, there was €319bn of corporate bond issuance in the first seven months of the year and a decline of €33bn in loans made by European banks. That marked a reversal of the balance of corporate funding from a year ago, when bank loans totaled €346bn compared with corporate bond issuance of just €119bn. Last month, the CBI, the organization of UK employers, said that large companies saw credit lines shrink.
Banks across Europe have insisted in recent months that any decline in lending is due to a fall-off in demand, not supply.
But some banks blamed a misalignment in supply and demand. Brian Robertson, group chief risk officer at HSBC, said that those companies you’d like to lend to don’t want credit and in many cases those that do, you don’t want to lend to.
Another large European lender said that banks are eager to lend money to good companies. But many of them don’t need it. We are not going to throw good money after bad on weak companies.

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