The ‘credit crunch’ is not a cereal bar. I bet you knew that, but just four weeks ago, I didn’t.
Any student returning home after a year studying abroad will tell you that whilst at first things may seem the same as before, little differences begin to crop up. For example, there are a couple of new cafes on Great Western Road, and there seems to be a building site opposite the library. Wayne Rooney and Coleen McLaughlin got married (I don’t really care), and Boris Johnson is now Mayor of London. Gordon Brown doesn’t seem to have many friends at the moment and oh yeh, we’re having some sort of financial crisis which means a pint of milk now costs an arm and a leg. I must have heard ‘credit crunch’ a million times since I’ve been home and it’s grating on me. Economics is certainly not my forte; so for my benefit as much as yours, I’ll keep this simple and we can learn together – gather round!
The term ‘credit crunch’ has often been used in general terms to describe the current financial epidemic including recent inflation, however it applies specifically to the sudden reduction and availability of loans (i.e. ‘credit’) or a sudden increase in the cost of obtaining loans from banks. The crunch we’re now experiencing has been caused by people in the US with poor credit ratings who were unable to meet higher debt repayments due to rising interest rates. As more mortgages were terminated so that properties could be repossessed and then re-sold for a profit, the American housing market plummeted.
Often, financial institutions use customer’s debts as a source of income which they can invest. As fewer people are able to pay off their debts however, such institutions are unable to take on more debt themselves and have little money to lend. This is how it affects us. Not only will we find it harder to get a loan, mortgage, home or credit card, but as we’ll have fewer opportunities to get out of debt, we spend less. Companies including the corner shop then react by putting their prices up- leaving us with little spare cash for the pub on a Friday night.
The latest food price figures show the average cost of putting a meal on the table is a third up on a year ago. In fact, green British-grown vegetables are some of the only products not to have increased in price. As thousands of first year students will be buying their own shopping for the first time, they may be in for a shock. Similarly, those of you privately renting for the first time may get a nasty surprise when your bills arrive in three months time.
It doesn’t stop there either – a recent survey has shown that students are paying almost 20% more in rent than they did four years ago. It’s not surprising then that our social lives are suffering. Recent statistics published in The Daily Telegraph show almost one in three people abandoned plans for a holiday this year and more than half the population has scrapped treats such as cinema trips as they attempt to tighten their belts. The outcome of the ‘credit crunch’ may also be more long-term than was first expected. With employers recruiting fewer graduates in a bid meet budgets, recent figures from the Office for National Statistics show there are now 8 000 more people staying at home than five years ago.
With no sign of the ‘credit crunch’ abating and some estimates claiming it may last for 5 years, it seems there’s a higher chance we’ll be both unemployed and living at home when we graduate. On the bright side though, we can keep our parents happy by eating our greens.
10 Tips to help beat the bite
1. Quit fags
2. Drink cider
3. Spend less time in the shower
4. Make your own lunch
5. Wash at 30 degrees not 40
5. Get your furniture off the street.
7. Get free condoms from the SRC
8. Read the Metro
9. Heating off – wrap up warm
10. Go out less and read GUM more