economic crisis
homework
A single spark can make up a gigantic fire. This phrase can make people think and analyze it so that many ideas can come out. What can this phrase can seem and can be compared with the so mentioned crisis? What it represent? Well this phrase means that the big problem come out from a single thing. If we compare it with the crisis, the big error comes from a single error. This error makes up the crisis. The error can be divided also. The error comes from the so many people that asked for a lending. But this lending become continuously. Many people started to ask for money several times without thinking if they really needed or not. People sees very easy to buy things in such an easy way that they wanted to buy more. People spend the money they do not have. They ask for more money instead of thinking how to pay back what they asked before. Now imagine all the money that people are spending when they really do not have it.
In the other hand, the banks kind of think “it is a good idea to lend money to people, the more we lend, the more interests they will pay back , so lets lend them what they want, they will return us more, so we win. It is a good business.” The problem starts when they do not check if the people are able to pay back, if their economy is stable or not. Some banks ask for money to other banks to make their own business. The clear example was one of the UK bank (Northern Rock). With the money they received they make several businesses and of course they lend more to people.
The fire come out when one thing is not well functioning in the bank system. A snow ball effect come out and then it become a gigantic fire As we saw, the bank only stay with about 10% of the money people keep there. The other 90% is in a mixed process of lending money to people, lending money to other banks among others.
When the crisis is up high, we start blaming each other, when we do not see that we were part of the spark that made the crisis. To avoid this kind of problem, we need to be conscious about our finances, our economy, in other words we need to manage correctly our money and ask for money only when necessary. Banks should be conscious to who they are lending the money and how many they will lend. A good plan banks needed is to have an emergency plan in case of a crisis.
To avoid this we should need to be responsible of our own economy and ask for money when we really need it and always remembering that we will pay back more, so we can be careful when we ask for money to the bank.
The crisis is now going down and lets hope that with this “test” we can now be conscious to not repeat this one more time to avoid repeating the problem we are suffering.
In the other hand, the banks kind of think “it is a good idea to lend money to people, the more we lend, the more interests they will pay back , so lets lend them what they want, they will return us more, so we win. It is a good business.” The problem starts when they do not check if the people are able to pay back, if their economy is stable or not. Some banks ask for money to other banks to make their own business. The clear example was one of the UK bank (Northern Rock). With the money they received they make several businesses and of course they lend more to people.
The fire come out when one thing is not well functioning in the bank system. A snow ball effect come out and then it become a gigantic fire As we saw, the bank only stay with about 10% of the money people keep there. The other 90% is in a mixed process of lending money to people, lending money to other banks among others.
When the crisis is up high, we start blaming each other, when we do not see that we were part of the spark that made the crisis. To avoid this kind of problem, we need to be conscious about our finances, our economy, in other words we need to manage correctly our money and ask for money only when necessary. Banks should be conscious to who they are lending the money and how many they will lend. A good plan banks needed is to have an emergency plan in case of a crisis.
To avoid this we should need to be responsible of our own economy and ask for money when we really need it and always remembering that we will pay back more, so we can be careful when we ask for money to the bank.
The crisis is now going down and lets hope that with this “test” we can now be conscious to not repeat this one more time to avoid repeating the problem we are suffering.
1 comment:
Chris you need to put this as a comment on my post - thanks.
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