Recent stats released by Credit Action found that total UK personal debt now stands at L1,458 billion, with average household debt in the UK excluding mortgages totaling L9,240. The virtual overnight collapse of Lehman Brothers in September 2008 was the catalyst that brought the world economy to its knees with breathtaking rapidity. As more and more people defaulted on their home loans, securities backed with subprime mortgages, widely held by financial firms lost most of their value. The result was a precipitous collapse of the capital of many banks and the tightening of credit around the world that signaled the beginning of the recession that has plagued them for the best part of the last 18 months. Lending lots of money to poor people who have no hope of being able to repay at inflated rates further down the line is not good economic sense.
The dangers of the never never David Andrews Credit Management; Nov 2009; Docstoc pg. 20 Reproduced with permission of the copyright owner. Fu
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