FINANCIAL CRISIS EXPLAINED

SUB-PRIME LOANS Americans who could not afford to buy homes were encouraged to buy homes with very little or no downpayment They spent more than they could afford When interest rates went up, they could no longer afford to pay the installments They lost their homes and the banks took over

Banking Crisis The Banks who lend the money to the previous home-owners suddenly had many homes under their control When the prices of homes continued to fall, the banks also lost a lot of money The Banks themselves started to go bankrupt

Financial Meltdown Banks and other Financial Institutions did not trust each other, and did not lend money to each other With no money, the banks also could not lend money to other companies With no money, companies also collapsed and the workers too are left with no jobs

What are Governments Doing The US Government has agreed to provide US$700 Billion to help the banking industry The British Government has provided £50 Billion to help its banks Singapore and many countries have lowered interest rates

How does it affect Singapore Since the meltdown, Singapore companies have lost S$250 billion Our economy has registered negative growth Prices continue to rise, electricity bills to go up 20% People are spending less People are worried and less confident

How does it affect you Your parents may end up losing their jobs Your parents will have less money to spend The School will also have less money to spend Job prospects may not be so good when you finish school

What should we do Do not spend more than you have Help your parents save on their daily expenses Help the school save on its electricity and water bills Study hard so that you may enter ITE and get a good job rather than finish your education here