Monday, 20 February 2012
LIQUIDITY CRUNCH! WHOSE
We are told everyday of our lives that there is a liquidity crunch. the questions that we ask ourselves is what is this liquidity crunch,why do our cabinet meet and discuss this big worded entity,what do they come up with. According to Wikipedia,a credit crunch (also known as a credit squeeze or credit crisis) is a reduction in the general availability of loans(or credit) or a sudden tightening of the conditions required to obtain a loan from the banks. A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates.
In such situations, the relationship between credit availability and
interest rates has implicitly changed, such that either credit becomes
less available at any given official interest rate, or there ceases to
be a clear relationship between interest rates and credit availability
(i.e. credit rationing occurs). Many times, a credit crunch is accompanied by a flight to quality by lenders and investors, as they seek less risky investments (often at the expense of small to medium size enterprises). Zimbabwe is going through one of these "credit cruches" and it is the ordinary man who is feeling the bite. It is the ordinary woman who in need of fending for her family dies trying. It is these economic terms and situations that force an ordinary man to resort to unothordox means for survival. The question is for how long are we going to live from hand to mouth.
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