What credit crunch?

They say a butterfly’s wings on one side of the world can cause a hurricane on the other side. Maybe the same person, who said this, also asked if a tree falls in a forest and there is no one to hear it, will it make a sound… This is how I see this credit crunch effect on the world and world economies. What started off as a decline in properties values, placing risk on financial institutions and what happens? The world falls apart financially speaking.

It does look like things have been set-up to fall and many of the pieces are coming apart. It started with property, then financial institutions, then car companies this filtering down to you and me. I sometimes wonder if this credit crunch is not being made worse by ourselves. We see the fall-out on the news media and the talk of companies closing; people losing jobs and this in turn make us as consumers more conservative with our spending.

We delay making decisions on whether to extend the house, replacing the car that needs replacement and not buying those expensive items where you need to make more loans. These decisions are also being made by companies, making plans and cutting costs and reducing spending with the view that this credit crunch will also affect them. If everyone is doing this with the view that the credit crunch will affect them in the future; are we then not “designing” that future for ourselves?

If this is true then I suspect the idea of the credit crunch is being “sold” to us and we are “buying” into the concept. We are making the effect of the credit crunch worse, causing more people to loose their jobs, more companies closing, more nationalization of large enterprises in the name of a rescue plan. This cause more economies moving into recession and ultimately depression. Are we looking at another world war on the horizon caused by desperate people and nations?

What are the potential outcomes of this worst case scenario? Has this credit crunch been designed and sold to us for a worse case scenario outcome?