where's the money?

The basic problem is that economies around the world are overleveraged and banks have been lending to costomers who did not had the creditworthiness of returning the amount in time if there was a crisis. This has been going on for years as the prices of the property contunued to rise and banks would get back their investment. But now the things have changed. The demand for property fell and along with this the prices. The persons who had been taking loans selling the property and then returning the loans were in no position to return the money. This is when the crisis developed and banks where flooded with bad loans. Moreover they had lended heavily several times their capital base by taking loans which inturn could not be returned. This turned in to a vicious circle and banks crumbled one by one in this atmosphere.

A lot of the economy is based on consumer attitude believe it or not. If people thing that things are going down hill, then they will stop spending their money. They think they should hold onto it for harder times. Then there are all of the companies that went out of business. Almost everyone I know has been unemployed at some point during the last 2 years. The unemployment rate in Elkhart County went from 4.6 percent to 9.3 percent. This is the highest it has been in the 17 years that I lived there. Consumer actions make a huge difference, so I think everyone should go out there and splurge. Go out and spend some money, so that it will turn this economy around! Have a great day!