m8 they are the most powerull goverment in the world everything they do affects us . thier ecomany is in a bad state so this is due to over spending in iraq . near 700 billion so far . this cost a lot of loans to be called in our banks heavily invested in the us mortage markets and their housing market has cloasped . jobs being lost . houses with moratages worth more than the homes people going bankrupt its all has a massive domino affect . the dollar at the moment is near 2 dollars to a pound thats crazy .
so you plainly dont understand what the credit crunch is, or how it could occur with or without the US then.
It works like this: Bank A loans billions to Bank B, Bank B loans millions to Bank C, Bank C loans hundreds of thousands to whoever, people, businesses etc. Some of the people Bank C loan to are known to be high risk, but Bank C doesnt mind as it likes loaning to high risk areas, higer interest.
Now, these high risk customers of Bank C start to default on their loans to Bank C, which is a shame but was always going to happen. Bank C cant keep up its repayments to Bank B, as it had too much cash out on loan in high risk areas, so is a bit screwed. As a result Bank B isnt able to pay of its loan of billions to Bank A.
The result, well everyone holds their breath for a bit and tries not to panic, they have seen this before and know that the national banks will try to sort it. However, all those Bank C's out there have been loaning to too many high risk customers and the national banks can see this, so they cant alter the economy too much without sending the global markets into panic. So we all end up with smaller banks going bust (Norther Rock for instance, who just loved those high risk customers) and some of the larger banks merging with even bigger banks (Bear & Stearns is a good example of this).
Now, you will notice that the geogrpahical locations of these banks and their customer bases are irrelevant - it wouldnt have mattered if they were in Australia or Russia or the US, the same thing will have happend.
Also, the cost of the war in Iraq has nothing to do with this at all, it is a completely seperate matter. If you would like to know, the US econmy was more or less static well before the Iraq war, and as all avid conspiracy theorists know - countries love wars as it makes them money, not the government, but the business man. Most countries in Europe are now operating outside of a war or arms economy, but making the shift from one is a very dicey matter. Wars and armed conflict make money for businesses, they keep people in jobs and keep money flowing due to the large amount of goods flowing through factories, warehouses and showrooms.
So, to sum up, you have the idea right, it is a domino effect, but you are slightly incorrect as to why it has happend.
