Credit Crunch

Last updated: Nov. 2008

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"Credit crunch", do you know what it means?

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What's so scary about the credit crunch?

Lots of people around the world are worried about something called the Credit Crunch.

You've probably heard your parents talking about it, or chatted about it yourselves at school. It's getting blamed for lots of stuff, like food costing too much, and people not being able to

go on holiday. BUT WHAT EXACTLY IS IT?

The CREDIT CRUNCH is a big money mess that's causing problems throughout the world. It basically means that banks have cracked down on how much money they lend to people. That means it's much harder for people to borrow cash and get things like mortgages, which

is a big sum of money to buy a house. WHAT CAUSED IT?

Most people put the cash they earn and any savings they have, into bank accounts to keep it safe.

Then, the banks lend it out to other people and other banks - but they have to trust that whoever they lend it to will pay it back. When people start having problems paying each other back things start going wrong, and a credit crunch begins

WHEN DID IT START? It first began in America in 2007, but since then it's been spreading all around the world,

because all the world's finances are linked together.

Source: CBBChttp://news.bbc.co.uk/cbbcnews/hi/newsid_7620000/newsid_7623300/7623384.stmPhoto fromhttp://shixian-anemone.blogspot.com/2008/08/aug-14th-2008-that-shrinking-feeling.html

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More on Credit Crunch

Definition from Wiki: A credit crunch is a sudden reduction in the general

availability of loans (or credit), or a sudden increase in the cost of obtaining loans from banks.

There are a number of reasons why banks may suddenly increase the costs of borrowing or make borrowing more difficult. It may be due to an anticipated decline in value of the collateral used by the banks when issuing loans, or even an increased perception of risk regarding the solvency of other banks within the banking system.

Source: Wikipedia http://en.wikipedia.org/wiki/Credit_crunch

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Vocabularies

credit crunch: 信用緊縮 crunch: 咬嚼聲 ; 財政困

難 ; 短缺 costing: 高成本 mess: 混亂 crack down: 取締 ; 掃蕩 mortgage: 貸款 savings: 存款 bank account: 銀行帳戶 pay back: 還款

spread: 蔓延 finance: 財務 availability: 可利用性 ; 可

得性 anticipate: 預期 collateral: 擔保品 ; 抵押

品 issue loans: 核發貸款 perception: 察覺 ; 看法 solvency: 償付能力 subprime mortgage: 次級

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References

CBBC at http://news.bbc.co.uk/cbbcnews/default.stm

Wikipedia at http://en.wikipedia.org/wiki/Main_Page