Will US$323B injection cure market flu?
By ebizniz on August 12, 2007 - 7:41pm
As I see it by Vancouver home Mortgage:
Published: Saturday, August 11, 2007 by Paul Vieira, Financial Post
The International Monetary Fund said the global financial market turmoil and related credit crunch should be "manageable."
In recent days rates on the overnight market had climbed well above targets set by central banks.
The widespread credit crunch is the result of mounting defaults in the U.S. subprime mortgage market, where individuals with higher-risk credit ratings are able to obtain financing for home purchases. This spilled over to banks and investment funds, which had exposure to this market.
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There are great concerns by the world financial markets that the credit sqeeze and lack of liquidity as a result of mounting U.S. subprime mortgage defaults may result in widespread economic slowdown.
The market is concerned that the U.S. subprime mortgage meltdown will spread to the general economy. As reported by Newsweek Business article A Widening Credit Squeeze? is spilling over to America’s credit-card debt.
The danger in the credit crunch and shifting of credit usage bu consumers to high interest credit cards will have a significant impact on consumer spending. And with consumer spending accounting for about 72 percent of gross domestic product, any slowdown in spending could have a big impact on the U.S. and Canada.
In view of this week's worldwide market turmoil, market analysts are giving it a even chance that Bank of Canada governor, David Dodge, would defer raising interest rates next month.
Hopefully, the credit crunch in the world financial markets will ease off, and the U.S. subprime woes will be contained. And,the excesses in the housing and mortgage markets will be resolved over time.
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