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Are we moving towards a credit crunch part two?

As the cost of borrowing continues to move higher and higher in international money markets, due to sovereign debt concerns within Europe, friction between North and South Korea and the general malaise in worldwide stock markets there is concern we could be heading towards a credit crunch part two. The cost of finance is vital to the successful recovery of the worldwide stock economy and local economies around the globe.

If, as expected, finance rates continue to rise in the international money markets we will see a point where it's just not feasible for banks to present competitive mortgage rates and loan rates. As rates rise this will push more and more people to the edge of the financial abyss and more and more property buyers will be priced out of the market. Those who believe that the worst is over may well have to think again because we are heading towards crunch point!

While the initial credit crunch in 2007 saw a concerted effort from governments and monetary associations around the world to bail out banks and businesses, there is no money left in the pot if we were to see a repeat of this. Quite where the money would come from to create new bailout funds is open to debate because even the long-term European banking bailout fund is creating significant friction between European Union members with the UK and France adamant they will not sign up.

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