US economy: The Next Financial Crisis? - "will it impact Europe ?" - by Charles Herman
As bond insurers struggle, it is another sign that banks will have mounting losses, which will make it harder for average Americans to get necessary financing for things like mortgages and credit for purchases.Starting last summer, as more and more homeowners began to default on their mortgages, banks wrote off billions of dollars in investments, based on those loans. In turn, banks turned off the lending spigot, making it harder to get a mortgage, or for businesses to make billion-dollar deals. All of that has fed into the recent economic slowdown, and what has been called a "credit crunch," a "liquidity crisis," or a "seizing up of the credit markets."
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