What is a Credit Crunch? When it is difficult to get a loan

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Presentation transcript:

What is a Credit Crunch? When it is difficult to get a loan Banks are reluctant to lend money Consumers are reluctant to borrow money This makes it very hard to GDP to expand rapidly (think circular flow) and create new jobs

House of Cards Led to Caused by Credit Bubble

Government Takeover of Subprime Mortgages FNMA & FHLMC Government takeover Wall Street Firms Bankrupt or Bought Bear Stearns Merrill Lynch Lehman Brothers AIG Insurance Company Government Takeover Government Takeover of Subprime Mortgages

Credit Crunch Radio Link http://www.npr.org/templates/story/story.php?storyId=112630903

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