Busted: Bankers and The Global Economy

April 8, 2008

UK: The Tight Credit Effect

Filed under: banking, central bank — Tags: , , , , , , — digitaleconomy @ 12:55 pm

The credit market has grown tight. Refinancing is more difficult. As a result of the scarcity, housing prices in the United Kingdom have began to fall. The numbers fell about 3% last month. Compared to the 10% – 20% fall in the U.S. housing market, the British situation appears small and is very early in the process.

British bankers are concerned. When buyers cannot get a mortgage, most buyers don’t buy a house. Then housing prices fall because the mortgage market deflates the housing market. Apparently, the confidence levels of UK bankers is questionable. They have been directly comparing their economy to the economy of the U.S. before the mortgage crisis. They are alarmed by the larger debt of British citizens compared to American citizens and the market is cooling dramatically.

The global banking economy has been shaken. National bankers are worried about having a repeat of the U.S. mortgage crisis. Expressed fear has a way of operating as a self-fulfilling prophecy.

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