Survival in financial crisis

Financial crisis reading To start with, you need to know what causes this financial crisis everywhere in the world. The current crisis in consumer capitalism - which has precipitated a mortgage crisis, a housing crisis, a spending crisis and a savings crisis in the United States and the West - has many causes. However, essentially it started with the credit crunch in the American banks. “Credit crunch” is a liquidity problem. People were so uncertain, and no one wanted to lend to anyone. Consumer capitalism Mortgage Credit crunch liquidity

One bank can make a series of bad or excessive lending decisions, but when this becomes commonplace, it is not 'the banks' acting in some collective conspiracy, but a systemic problem. In a debt-driven economy typical of countries like the US, the worst result would be a recession, as companies and individuals that rely on debt to operate suddenly find such funding has dried up. Excessive lending Debt-driven economy Recession Financial crisis reading

How bad is the situation now? So bad that some even compare it with the Great Depression in the US in the 1920s/1930s. One of the examples is that in one single trading day, the New York Stock Exchange index dropped dramatically and a loss of 1 trillion dollar was reported!!! Another example is that elsewhere the stock markets plummeted/crashed/plunged/nose-dived one after another. Great depression Trading day Stock exchange plummeted/crashed/plun ged/nose-dived Financial crisis reading

In response, the US government proposed a 700 billion US dollar bailout plan in hope of boosting the confidence. Governments else where, especially those in the euro zone, also came up with policies saving the market by guaranteeing the deposits in the banks or/and by nationalising some of the banks. Some countries central banks also cut the interest rates. Everything they do aimed at calming the nerve Bail out plan Boost Confidence Euro zone Deposits Cut the interest rate Calming the nerve Financial crisis reading

It seems something worked somehow! Yesterday the stock markets picked up from the huge loss last week and soar/surged/rallied/rocketed with big buying number. But experts warned that there is still a long way to go. soar/surged/rallied/rocketed Financial crisis reading

See what they have to say !! A.I’ve lost a ton in the market over these past few months. B: We’re all in the same boat. It’s frustrating but I think the worst is behind us. Many value investors are jumping back into the market. They see this as a major buying opportunity. A: I agree. There has been a lot of panic selling. Many people fear the world is coming to an end. I’ve even heard of people taking money out of the banks and putting it under the mattress. B: That’s going a bit overboard I’d say. I think economy will contract until the credit markets get sorted out, but I don’t think this is doomsday. I also think that the market will go up before the economic recovery. The market is a forward thinking animal. A: Let’s hope so. I can’t afford any more sleepless nights.

Phrases and Vocabulary used: A ton: A ton of something means a lot of something. It is slang. I don’t want to eat dinner tonight. I ate a ton at our business lunch. We’re all in the same boat: A phrase that means, "we are all in the same situation". If you are in the same boat as someone it means you are in the same situation they are in. The worst is behind us: This means that the worst part of the situation is over and it will start to improve from this point. Jumping: We often use this verb "jumping" to talk about someone going in and out of the stock market quickly, ie. quickly buying and selling stocks. Panic selling: Panic selling happens when many investors sell their stocks at the same time because they are scared they will lose more money. Panic selling causes stocks to become "oversold" resulting in a buying opportunity for smart investors. Mattress: A mattress is what you sleep on, ie, your bed. Sometimes people hide money and other valuable things under their mattress. They think this is a safe place.

That’s going a bit overboard: This phrase means to overreact or be very extreme. "I agree with you that he shouldn’t come to work late, but firing him for being late only once is going a bit overboard" Doomsday: Doomsday is the day that represents the end of the world. The market is a forward thinking animal: The stock market is often considered to be a forward thinking animal, because many stock prices are based on predicted future growth rather than on current performance. Sleepless nights: This term is often used to indicate situations where people are either extremely busy or extremely worried about something. She had many sleepless nights after her daughter went away to university. Many people in the US government have had many sleepless nights trying to figure out how to save the economy. Phrases and Vocabulary used: