| selnor said: The problem is almost all the banks in England are linked financially to banks in the US. Hence when it started to cave in the US, noone here in the UK could get credit including mortgages. Hence our housing market began to crash and is in a bad way. The bank of England is having to bail out some big name banks here, much like the government in the US is doing. It's a much bigger mess and knock on effect than you think.
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Okay... our housing market issue is a little different in the US. Our housing market started to crash a while back because of a "housing bubble", i.e. - market values had risen past reasonable levels, and then when there was a market correction people found themselves suddenly upside-down in their mortages, i.e. - unable to sell without taking a huge loss. Also, condominium builders didn't scale back a few years ago when the market for that housing went soft... they just kept building on speculation, hoping the market would bounce back, but it didn't. Now there are areas (such as the west coast of Florida), where huge stretches of new condos remain empty due to overproduction.
And you're right... even though I heard that financial institutions were impacted globally by the US problem, I didn't realize it was having a ripple effect on the economy over there.
