The credit crunch

With today economic headline again we linger on US Fed Reserve helmsman again after several times slashing of interest rate , sticking out his neck that his belief on the broader economy's recovery depends on the housing sector. As such i announced that much of our attention be drawn to the belief that house-buyers defaulters are the crisis locomotive in the made-believed downturn.Have we ever pondered further the true cause to the root of the crisis that has literally been fogging our financial systems for almost a century ?


I wouldn't have thought much before until my mind ticked on the basics of the algebra or any simple equation that even a primary kid could appreciate. For the house buyers who tend to obtain bank loan for the purchase would have their loan secured via a mortgage whose value is greater than the loan exposure.The periodic loan repayments are receivables or book debts and thus treated as assets in the Lender's accounts.Consider now the Money-lenders now want their obscene profits fast by adopting what a normal goods traders would do. This is what is happening now in the system that the money-lenders try to package them as one product which can be sold to anyone including the other money-lenders for quick bucks. Whoever money-lenders receiving the batons may repackage them for resale for another turn of profit.Now, subprime mortgage crisis broke out when the original house buyers defaulted the repayments.Ladies and gentlement, we 're talking of trillion of US dollars which has easily surpassed any GDP, if ever, generated by any super-powered nations.

Financial crisis!

Financial crisis? Do we really have one now , globally ? We could have different views whether we do feel it or just by hear-say. RS hopes the this blog could create a platform for everyone to have a say of their views.

Opening up any local mainstream newspaper today we could find some fractions ,though not full, of what's happening in the US economy particularly and the world in general- firstly the subprime mortgage crisis , the oil and food crisis and finally the financial systems crisis.In fact when i start asking myself what those really mean to me and how they could practically affect my life, perhaps it's just matter of time before things start creating ripples.

Thanks to some local enthusiasts who really go behind the scene to unveil what is actually happening to the global economy, Malaysia in particular.If what have been claimed to be imminent are not mere folklore, are we all well-prepared for ? how should we get all armed for our family?