Crisis in Financial and Banking System

Yesterday, one of America’s leading investment banks, Lehman Brothers went bankrupt, leaving many unemployed and others worried about the health of the global financial system.

Some economists, worry that we could now see a real financial crisis that puts the whole financial system in peril. See financial collapse?

The Collapse of Lehman Brothers means:

1. Prospect of higher interbank lending rates and therefore higher mortgage rates for consumers
2. Shortage of money in financial system making it harder to get loans and mortgages
3. Credit crunch will last for longer
4. Savers are not immune, althought Lehman brothers is an investment bank the fear is high street banks might be the next inline.
5. Lehman Brothers employ 25,000 people world wide. 5,000 in the UK. They will now be unemployed.
6. House prices will fall further due to shortage of lending and lack of confidence

Credit crunch persists