Absorbing Credit Crunch Impact – The knock-on effect from the credit crunch is now beginning to bring devastation and catastrophe to other sectors of the US economy. With localised rising unemployment
Absorbing Credit Crunch Impact – In different regions now resulting, more and more ‘innocent people’ in-directly connected to the mortgage fiasco are been drawn into financial difficulty.
It is estimated that 234,685 home owners in America issued foreclosure filings last month, a 5 per cent rise on February 2008. The states of Nevada, California and Florida have been hit the hardest, thus contributing to total repossessions soaring to unprecedented record levels.
This comes on top of further redundancies expected from within the Construction Industry, most notably Architects, Surveyors, Builders, Trade Specialists, Estate Agents, Mortgage Brokers, and skilled Tradesmen/women etc.
It is predicted commercial institutions will cut a further 200,000 in the next 12 to 18 months, to reduce costs as the credit crunch continues to wreak havoc on the balance sheets, of some of the world’s most prestigious financial banks. The US financial services industry, has already implemented a record 153,000 redundancies during 2007, more than half of them relating to mortgages.
Octavio Marenzi, head of Celent’s financial consultancy unit said, “The banking industry over the past 40 years has never seen a downturn in its revenue growth. In 2008, it looks like it will decrease for the first time in living memory. They are going to have to respond with severe cost cutting. It’s not an environment they’re entirely used to.”
Federal Reserve chairman, Ben Bernanke appearing before the Congress Joint Economic Committee, conceded that financial markets remain under considerable stress, despite recent Federal actions to inject liquidity and stabilize the situation. He also acknowledged the ongoing deterioration of mortgage credit quality and associated write-downs of mortgage related portfolios at large financial institutions.
Wachovia Corp, America’s fourth largest bank is the latest institution to get drawn in to difficulty, blaming an increase in foreclosures for a $2.8 billion write-down on its mortgage book, resulting in quarterly loss of $350 million.
Experts are now predicting a record amount of repossession activity in the next few months America’s history.
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