We are in the middle of a massive credit crunch and it is not set to start improving until 2010, so be prepared for 2 more years of financial stress.
Statistics that come from an expert financial data firm, said that a general drop in inflation will help to finally balance and aid the economy. Inflation is currently at its highest peak for around 16 years, and economists predict another five or six percent inflation by the end of 2008.
The credit crunch is not only affecting the average family, by hiking up transport costs, fuel price, and basic overall living costs. It is also affecting the once wealthy companies. As we have already seen massive bank giants, Lehman Brothers have been subject to bankruptcy, and Merrill Lynch and HBOS have been bought out.
AIG, who were one of the biggest insurer's providers in the US, have been nationalised, as have two of the other major mortgage lenders, Fannie Mac and Freddie Mac. The government's response is to supply a rescue package of around 500 billion pound. This ultimately will be taken out of the taxpayers pockets. It is always the innocent that end up suffering. These big companies waste there funds and then we end up paying out of are pockets for them to survive. Who cares let them go bust, I say, they made there mistake so they should suffer. We will end up paying the same tax increase even if they did collapse.
Another fact which has been neglected is that all of this turmoil had lead to a freeze of inter bank lending, as companies are worried about getting into another firms bad debt status. This will most probably have a knock on effect on loans and mortgages.
An economist states that "You are going to see the price of oil fall quite rapidly in 2009 and 2010 because people can't afford oil at the current price. I think at the same time we will see the price of food fall as well, so that suddenly we will find affordability start improving again."
I do sure hope that they are right and that this is not just being used as another calming tactic, I have had enough of the government trying to hide aspects to the public, and then when they get in trouble they start with the panic, and putting taxes up to cover there own mistakes.
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