The credit markets have been cited by economist to hold the greatest risks regarding economy and the businesses, Therefore; it remains to people understanding that the ultimate severity of credit crisis can still felt in the country (Bordo, & Haubrich, 2010). With people’s recognition that depending on how much people were adversely affected by credit crisis, the effects can still be felt regarding recession, stagflation, inflation and geopolitical upheaval.
Furthermore, massive amounts of debts that are underlying in the world economic system are still at significant risk of unwinding as a result of collateral defaults. Currently, the credit markets have calmed down, but it is still risky (Guerrieri & Lorenzoni, 2017). The underlying problem is still in existence as evidenced by the lack of liquidity that experienced in the capital markets and the significant write downs that done at the public financial institutions. Credit crises affected many people adversely beyond home owners and mortgage companies in some ways. First, many had spending changes many noted the reduction in spending was as a result of economic crisis (Bordo & Haubrich, 2010). Second, some households borrowed more this led in an additional interest payment of nearly over $1000 per year (Bordo & Haubrich, 2010). Third, some individuals decided to retire later as a consequence of the fall in stock and house assets. Finally, since the economic crisis many people have expressed dissatisfaction with their lives as the probabilities of uncertainties is way too high.
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The impact of the credit crunch is still felt today. Americans have still not fully improved from the crash as many remain uncertain of the country economy trajectory and the assured security of the financial system in place. First, many people are still saving much that years before it is as if they can foresee a disaster at the horizon. Second, many people still have negative thoughts towards the country economically and reflected with the American economy staggering in the last 15 years (Guerrieri & Lorenzoni, 2017). Third, a large population of the old generation is holding the investable assets with the older generation characterized to be more pessimistic than the younger generation (Guerrieri & Lorenzoni, 2017). In summary, many Americans are likely to indicate that the country economy is heading a wrong direction, but they are very optimistic of their trajectory.
References
Bordo, M. D., & Haubrich, J. G. (2010). Credit crises, money, and contractions: An historical view. Journal of Monetary Economics , 57 (1), 1-18.
Guerrieri, V., & Lorenzoni, G. (2017). Credit crises, precautionary savings, and the liquidity trap. The Quarterly Journal of Economics , 132 (3), 1427-1467.
