Moreover, money markets, especially in Europe, remain traumatized by the festering global credit crunch.

In recent weeks, the global liquidity and credit crunch that started last August has become more severe.

Surely, any explanation must include the global constriction of credit, especially for small and medium size businesses.

At the same time, the ECB has gained considerable credibility from its handling of the global credit crisis.

No, the main cause of the recent recession is surely a global credit boom and its subsequent meltdown.

Lee also must confront factors beyond his control, such as soaring oil prices and the global credit crunch.

Moreover, several African countries have received ratings from credit agencies, which has opened up global financial centers to them.

With the liberalization of global financial markets that began in the 1970 s, foreign sources of credit became available.

Beyond the provision of cheap credit and concessional loans is the global export of China s way of doing business.

Tighter US monetary policy could intensify the global credit shortage, thereby increasing pressure on Asia s economic and financial systems.

Unlike the US, China did not suffer from a liquidity shortage and a credit crunch during the global financial crisis.

After all, credit also dried up during the 1991 global recession, and yet funds were flowing briskly within 18 months.

Credit Where Credit is Due

Credit will soon come to everyone else as easily as it has to the banks. After all, credit also dried up during the 1991 global recession, and yet funds were flowing briskly within 18 months.

The international balance of payments remains in surplus, and there is still a net capital inflow despite the global credit crunch.

Moreover, whatever their intrinsic merits, none of these proposals addresses the global economy s most immediate problem undersupply, not oversupply, of credit.

A global system for prudential regulation and supervision a revamped IMF managing a global reserve currency, coordinating global macroeconomic policy, and providing agile credit lines and an international debt court all of these must be on the agenda.

The Fund is also hoping to establish a new Global Stabilization Mechanism to provide credit lines to regional groupings (like the EU).

Credit

Credit

But, partly because several African countries have escaped the hang over from the global credit crisis, more investors are focusing on business opportunities there.

A decade later, in response to the global financial crisis, China loosened credit quotas and planning controls on SOE run local government infrastructure projects.

Generally adhering to global standards in the transparency of financial policies and banking supervision, the financial sector provides ample access to credit for entrepreneurs.

Global stock markets have, overall, reached new highs. And credit markets show low spreads, while long term bond yields have fallen in most advanced economies.

The collapse of credit in the global financial system is having an even more devastating effect on the countries of the periphery than those at the center. Credit lines are withdrawn, maturing loans cannot be rolled over and trade finance has dried up.

Unfreezing Credit

Photo Credit

Rural Credit

Financial Credit

Indeed, just as microeconomic problems in the financial sector triggered a credit crunch and fueled a global recession, so microeconomic factors hold the key to recovery.

But Latin American countries, from a credit standpoint, are a lot better off than they have ever been to withstand turbulence and weather global market problems.

But better now than later, when excesses in asset and credit markets would spawn new and dangerous distortions on the real side of the global economy.

First, they should push for new rules that make financial crises less likely and their consequences less severe. Left to their own devices, global financial markets provide too much credit at too cheap a price in good times, and too little credit in bad times.

This way public credit registries and credit bureaux may be able to operate and provide adequate and up to date electronic credit information.

Banks and credit card companies have become much more cautious about extending credit.

Credit histories cannot be shared, because a credit bureau is just getting started.

The supply of credit, in other words, resulted from the demand for credit.

China s Credit Overdose

Picture credit Redbelt

Photo credit Hussain

Photo credit Nzingha

Photo credit Sietske

Picture credit Butterfly

Credit stopped flowing.

Picture Credit Intlxpatr