Where I’m investing my money in 2009 – Part 3
You’ve heard about this ‘Credit Crunch’ right? Well lets be honest, it’s pretty hard not to have when the worlds media have become obsessed about reporting anything that’s been remotely credit crunched. The root cause of everything that is happening right now is a lack of available credit, a symptom of this is the economic downturn which has now transformed into a recession.
Based on the well known economic model of supply and demand, “price will function to equalise the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity”. So with the supply of credit being significantly constrained we either have to reduce demand or increase the price we are willing to pay for credit.
