Why is the current economic situation referred to as the "credit crunch"?

Question

It's not a term I have ever heard before. Why isn't it simply referred to as a recession?

Answer 1

The current administration, in hopes of bolstering the survival of the republican power does not want it to be called a recession.  The credit crunch comes from the credit that banks and mortgage companies gave to lent to marginal customers for real estate so really only addresses the real estate crisis.

Listen to Alan Greenspan, he knows what is really going on.

Answer 2

its been called a credit crunch as most of the problems associated is people getting credit to a level that they can not pay back

Answer 3

The term credit crunch refers specifically to the tightening in lending and the decreased ability to borrow  by financial institutions and this knock on effect on consumers ability to borrow.

Answer 4

Because, as yet, we are not in recession, simply heading for it. It may occur, it may not, although it is likely. Inflation is higher than the official government figures, and lending is at an all time low. Time will tell as to what happens, you can't know what may happen tomorrow, read back in 10 years and we'll know if it is a true recession or not.

Answer 5

They want to down play it as much as possible..  

Just a minor problem, so the people won't panic as opposed to saying that we are in the middle of the complete breakdown of the economy of the USA, and the USA is no longer respected as a major world power.  

Answer 6

It's not a recession yet.  Think of a Credit Crunch as those events leading up to a recession.  We may or may not fall into a recession, lets hope not.

Answer 7

exactly what it says in the title, credit/mortgage companys will no longer give you credit unless you meet a very strict criteria that they did not ask for 6 months ago.

Answer 8

The Credit Crunch has come about due to some bad lending in the sub-prime mortgage market - this has meant in simple terms that there will be less money available for lending since some jokers lent it when they shouldn't have... and global banks bought the bad debts (with our money).

http://www.thecreditcruncher.com/2008/06...

There are more factors that are influencing the global markets including rising prices and static wages which means that soon we will be able to say that we are officially in recession. According to the dictionary definition though this is not yet a recession.

Recession is a precise term, but the Credit Crunch does not really mean anything as it cannot be measured. Anyone could say tomorrow that the crunch is over, but because there is no precise definition, no-one can say when it started or more significantly when it will be over.

http://www.thecreditcruncher.com/2008/07...

Be prepared for a slow down in the economy (less money being spent), job losses and belt-tightening for at least two years.

Answer 9

Oh, so you just ignore my message on Facebook. TALK TO ME.

And by the way, I don't know the answer to your question. Why do you want to know anyway? It's just a term.

Answer 10

We are not technically in a recession because a recession means two quarters of negative economic growth.

However, we are probably EFFECTIVELY in a recession because the government growth measure is GDP. GDP bears no relation to our standards of living. What they should look at is GDP per person. Mass immigration has probably increased GDP but lowered GDP per head.

UK government does not like the word 'recession'. I heard a radio commentator referring twice to the 'r-word' (meaning recession) and then saying, 'Look, I didn't say it'. What that means is that there may be a ban on using that word in the media.

Answer 11

Because the government dont like that word. They will probably ban it soon.

I heard a politician on the radio the other day and in response to the question " Dont you think that we are heading towards a recession due to rising fuel bills, rising mortgage payments and falling house prices" he response was "the fundamentals of the UK economy are still good"  Lol

What the f is good about that ?

Answer 12

It's a reference to the fact that it's now more difficult to obtain loans and mortgages than say a year or two ago. The term originated in America where up until recently, anyone could get a loan without any forms of credit checks or vetting. These were handed out in their millions and the resulting defaults on these "sub prime" loans as they were called started the "crunch"

Answer 13

At the moment we are not in a recession.I think the gloom & doom merchants are trying to talk us into one.Has for credit crunch some

one will have thought the name sounds good.It gets on my nerves.

Lets hope we ride the storm out.