The Affect of Credit Crunch

With the changing of programs and guidelines in the mortgage industry it is starting to have a negative effect on the entire nations economy but it doesn't stop there. It will also affect the global marketplace. The reason for this is because some people are stuck in high interest rate adjustable home loans and can't get out. Many are struggling just to make the monthly payment and hold onto the property for fear of ruining their credit. Because their mortgage payment amounts are escalating they have less disposable cash. The cash we use to buy cars, fill up our gas tanks, purchase products and services. Already people are shopping less and canceling memberships or services. These are all signs of the beginning of a recession. Just last week I went into a major retail store at the Newpark Mall in Newark California and I can't recall a time where it was so empty on a Thursday evening. It was like a ghost town. Expect this to continue and to grow. Soon we may only see the wealthy shopping regularly.

This will also affect people outside of the United States. Remember that a lot of the products we buy in the United States comes from overseas. Not everything we buy daily is made here. In fact the majority isn't. Just pick up a box on a clock or a radio. Usually it will say, "Made in China" these days. If the majority of Americans can't afford to buy the prices of products in the stores will go up and the top one percent of the wealthy are not going to go out and buy hundreds of the same product. This will cause a chain reaction and drive the dollar down even farther compared to the other currencies. All this means is that our dollar in our pocket goes a lot less farther than it used to. Most Americans are already upset at the cost of a gallon of gas today but what if that price doubled? They already pay more for gas in other countries.