How Long Will Credit Crunch Last?

Despite the failure of many leading banks such as Bear Sterns, Lehman Brothers and HBOS. Many predict the credit crunch still has longer to go.

The credit Crunch will last for Longer Because:

1. House prices are still falling compounding the problem of negative equity.
2. Banks still need to write off more bad debts stemming from losses on US mortgages. A report by The Standard and Poor said its estimate earlier this year of total credit crunch losses of more than $250bn had now risen to $378bn - and could double to nearer $500bn as house prices in the US continue to fall.
3. The demise of investment banks like Lehman Brothers is a problem because they were one of the major players in buying toxic US subprime debt.
   
4. US, Europe and UK are entering into recession. With unemployment rising more people will suffer home repossession (even people not on subprime mortgages) therefore, there will be a greater shortage of funding
5. Bank liquidity is poor.
6. Low confidence and volatility on the stock markets

See also:

• How Long will US recession Last
• Credit Crunch - Worse still to come at Guardian