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The ‘credit crunch’ we have all heard so much of originated in some relatively reckless mortgage lending in the USA. This was partially obscured by the banks ‘cleverly’ repackaging and reselling these loans to other banks and financial institutions.

As we all know though, eventually pigeons come home to roost. Thus some of the weaker borrowers in the USA started defaulting on those loans. Suddenly the financial institutions who had bought the packages found them to be worth less than they thought and less than they had paid for them.

Christopher Cook

Those packages are assets of the banks and other financial institutions. Therefore as they were acknowledged to be worth less, so the banks themselves were seen to be worth less. Thus stage one of the cycle – financial markets including the Stock Exchange, lose confidence and lose value. Banks become reluctant to lend – even to other banks. But only the financial markets suffer.

The next stage is the one where we are all directly affected. And this is now running. The shortage of credit and its increasing cost has a detrimental effect on the ‘real’ economy - where goods are made and services provided – where jobs are made and lost.

As companies start to ‘make economies’, we see rising unemployment begetting falling demand begetting yet more unemployment, etc. Now the ‘real economy’ is hit. Now we read of companies relocating jobs abroad (e.g. Barclays), cutting services (e.g. Ryanair) and famous names going out of business (e.g.Fullers).

But what’s happening locally? Is the regional picture the same as the national one? Let’s hear your experiences. Let’s hear your views.