What is a Credit Crunch?
"A credit crunch (also known as a credit squeeze or credit crisis) is a reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from the banks" (http://en.wikipedia.org/wiki/Credit_crunch)
But what caused the Credit Crisis of 2008???
Several factors were responsible like:
- Sub-prime mortgages
- Collateralized debt obligations
- Frozen credit markets
- Credit default swaps
For an illustrative explanation, view the following video:
Reference:
- Credit Crunch, Wikipedia http://en.wikipedia.org/wiki/Credit_crunch
- The Crisis of Credit Visualized- HD http://www.youtube.com/watch?v=bx_LWm6_6tA&feature=related
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