|Success is not the result of spontaneous combustion; you must set yourself on fire. - Reggie Leach|
|Home Credit-to-Debt Ratio Debt-to-Income Ratio|
There’s a risk you have to take in every business, in every system where money’s constantly circulating and attracting more money...after all, this is what business is all about.
For most people it is true that the more money they have, the more they will spend. It’s in our nature. We have to admit that we are greedy and thoughtless. The greatest event of 2008 was the financial crisis. The finacial systems crashed, and it all began in the United States, the country with the second largest economy after China.
You could see this financial crisis coming for a long time. One of the main causes of the crisis was the rise of the real estate market in the US. People woke up to the fact that real estate prices grew to the stars at night, but everybody got used to the situation and continued to take extremely cheap mortgage loans, granting with personal real estate (house, land etc.) and low interests regarding the financial power of the country and the high price of real estate market.
After the market dropped to the ground, the garancies did not have the initial values any longer and the banks and financial institutions could not get their money back entirely due to bad credits.
This was one scenario of what happened and we now know what the result was. Many peple understood these facts but they still couldn’t get out of this mess easily. First, they took part in adebt consolidationprogram, recomended by the European Union, so they wouldn’t get deeper in the crisis and to avoid panic situations as much as possible. Then the plan was to start a debt managementprogram and start building up everithing from the ground.
It is said that the people were encouraged to take loans to run their businesses, which would attract more money to the economy by reducing the unemployment rate and deblocking financial circuits. It was a real risk that the institutions took in giving bad credit loans, but they were encouraged and helped by the states and unions in this program. The crisis was unavoidable.
Despite the bad situation we live in today, we have to make the best out of it and in the same time we musn’t turn away from the undisputed facts; we just have to be more careful with loans and businesses in the future.
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