The financial crisis of Wall Street is influencing the world economy
Fort Worth, TX (WiredPRNews.com)— When shady loans were made to unqualified borrowers and the borrowers defaulted on them, it banks tightened up their lending standards to a level that made it nearly impossible for banks to loan to one another.
This ripple effect has made it hard for people with good credit to get loans for automobiles and homes, according to a Reuters article by Michael Conlon from October 8, 2008 that appeared on Yahoo.com’s news page.
According to Conlon’s article, the consumers have secure employment and money but are afraid to make any large or non-essential purchases. Some cautious consumers, according to the article, have been pulling money out of their banks for fear that the institutions may collapse, while others have stopped going out to eat or have put off wedding plans.
While the US unemployment rate has stayed steady at 6.1% for the second straight month and oil prices are near half of what they were a few months ago, the slow down in the market is hitting folks in Iceland, Argentina, and Slovenia, according to the Associated Press article.
While the economic slowdown is hitting many people, there are some bright spots. One is that investors with large cash reserves can buy at record low prices. Another is that the credit crunch has forced financial discipline.