Crunchy Credit Flakes

So tired was I on Monday, I completely forgot to mention the great victory by Liverpool over the scum. It was long overdue, with the last victory coming in 2004 (before Benitez), and the last at Anfield way back in 2001, I was only 21 then! It's been a long time needless to say, but as I've left it so late to gloat about, the feeling has passed.

This week has seen a lot of movements in the financial market with the US government intervening to save the likes of Fanny Mae, Freddy Mac and more recently, AIG. First of all, who or what the hell is Fannie Mae? Had anyone heard of them before last week? Doesn't Fanny Mae mean buttocks? No wonder they're in trouble, it's like have a company named 'Arse,' doomed for failure don't you think?

With some research I've discovered that Fanny Mae and Freddie Mac own or guarantee $5.3 trillion worth of loans and mortgages in the US. Due to increasing number of defaults and repossessions they have lost billions as they have to payout when ordinary homeowners can no longer afford their mortgages. The US government has stepped in by providing funds (from the taxpayers) to support the two firms. The government plans to guarantee the firms debts and provide fresh liquidity to make the business less vulnerable to the declining housing market - costing in the region of $25 billion.

Today, the US government announced that it will also be bailing out insurer (and shirt sponsor of Man Utd) AIG, this time to the tune of $85 billion. AIG has over a trillion dollars in assets and insures bank loans around the world. Again, it has been all because of the collapse in the housing market, having to make payments when customers defaulted on their loans. Unlike the Lehman Brothers which filed for bankrupcy on Monday, AIG's assets were felt to be more important and potentially cause more damage if they were to collapse, hence the US government stepped in.

All of this firmly falls under everyones favourite phrase "credit crunch." The banks are in trouble due to years of over spending and now we the taxpayers have to bail them out. In this country we have already suffered the crisis with Northern Rock and other firms appear to be in danger, including the Halifax (how much were those fancy adverts?)

It's not just the banks who are in trouble, only last week, travel company XL collapsed and in an instant thousands of customers were left stranded abroad, with no flights to get back. Luckily for them, the Civil Aviation Authority has stepped in to try and provide flights for those stranded across the globe. However, there is a downside. The CAA has a deficit of over £20 million due to previous interventions when travel companies have gone bust. Who do you think is going to foot the bill for the stranded XL customers? Us, the taxpayers of course. Doesn't seem fair. I know it's not the customers fault that XL went down the drain, but why should we have to bear the cost?

Personally, the "credit crunch," is all very confusing for my scientific/medical mind. However it has definitely affecting my finances. Basically, I'm earning the same amount, but everything has become more expensive. Petrol, gas, electricity, food - never have the ASDA and TESCO value items looked so appealing. Last year I took out a huge mortgage, not one that I could get this year, but since then my house value has decreased, so I have to sit it out. Luckily, inshallah, as I progress this year and qualify as a GP, my earnings will increase, so it should ease the burden somewhat.

It's been a bit of a ramble today, mainly because it's not something I know much about and also because I'm having to rush - unusually, it's a busy day today. Hopefully a accountant or finance specialist may be able to shed more light on the whole "credit crunch" fiasco. Mr Toodle-Loo perhaps?

Take care all,
Thoughts just flow, when do they have to make sense?