It is a good way to stop the connect between the circle!!!

In 2008, the subprime loan crisis becomes to the huge finance crisis that affects the whole finance world. The most important event is the bankruptcy of the investment banks in US and Europe. Those banks had high credit rating and went bankruptcy in one month. This causes a serious result which is no more trust between the financial institutions in the world. Threrefore the money liquidiity is freezed between the financial system.

This freezed situation also happens between the financial institution and the people who want to borrow money. Therefore, the defaults of house loans and coporate loans are also increasing. Moreover, this alos affects the financial system and the loan crisis becomes more serious.

It just likes a circle. Loan crisis => Bankcruptcy => liquity freezed ==> loan crisis. Therefore, the most important thing is to stop this circle. Govenments should provide the fund to the borrower, provide the liquidity to the financial system and provide the credit enhancing system to the banks. Then, the crisis will become peace slowly. Cutting interest rate is useless. Therefore, I suport UK Govenment which invests new money to the banks system and ask the banks to lend the money to house loan borrowers and companies. It is a good way to stop the connect between the circle.


Written by Chung-Pin Yang