“Would you like to buy a….yawn”

 

The credit crunch, by definition, refers to a financial climate whereby those who have previously relied on credit, or found it easy to gain credit, are now being refused credit. Loans, mortgages and credit cards are becoming a lot harder to obtain.

 

Why have banks tightened borrowing criteria? Well, it’s simple. The banks have foreseen a decline in the value of the collateral one might stake against your loan (namely, your house), and they’ve got nervous.

 

Also, they’re wary of other banks that they trade with becoming insolvent, particularly in the aftermath of the Northern Rock debacle and recent Bradford and Bingley scare.

 

So why, therefore, is every conceivable rise in the cost of living being blamed on the credit crunch? It can’t all be due to banks narrowing their borrowing criteria surely?

 

Let’s look at the most recent issues blamed on the credit crunch and evaluate whether they are, indeed, a product of this lending meltdown, or just due to consumer negligence/completely unrelated factors/media poppycock.

 

(1) Worry Induced Sleep Deprivation

 

Yes, you did read that correctly. Apparently, the credit crunch is causing many a sleepless night in bedrooms up and down the UK, with some Estate Agents only able to get 5 hours and 50 minutes shut-eye a night due to credit crunch caused stress.

 

*Credit Crunch Excuse Rating: That’s not the credit crunch keeping you awake boys and girls, it’s your conscience. 1/10

 

(2) Business Fraud on the Rise

 

Business fraud in the UK has taken a 74% leap in the last six months, with the credit crunch forcing law abiding citizens into a life of crime.

 

The biggest threat to businesses came internally where management fraud constitutes 46% of losses totaling £705million.

 

*Credit Crunch Excuse Rating: Plausible I guess, although some of those managers could simply be measuring themselves against other industry fat cats and feeling they deserve more, by fair means or foul. 8/10

 

(3) Slowdown in the Indian Cement Industry

 

You’ll like this one. The Indian cement industry is in disarray because narrowing credit conditions and problems in land acquisition have made expansion for Indian cement makers almost impossible.

 

*Credit Crunch Excuse Rating: Indian cement, such a well established and highly treasured commodity. 3/10

 

(4) Credit Crunch Accounts for Lower Grocery Budgets

 

Due to a credit crunch caused frugal financial environment, shopping baskets aren’t quite as full as they used to be.

 

With a lack of credit available, many consumers are scaling down their weekly shop, spurning high quality stores and turning to high value stores instead.

 

*Credit Crunch Excuse Rating: There are two factors at play in the current financial climate; the credit crunch and an increased cost of living. They’re separate. Rising grocery prices are due to the latter. 2/10

 

(5) Small Businesses at risk due to the Credit Crunch

 

UK small businesses are preparing to batten down the hatches as the credit crunch increases its grip on the economy.

 

Consumer confidence is at an all time low, and customer numbers are dwindling.

 

*Credit Crunch Excuse Rating: Give me strength. Retail sales may have taken a small dip in May, but that’s been happening at this time of the year, every year, year on year, for as long as I can recall. Additionally, Germany and Greece are making a strong retail comeback this summer, and HMV sales are up 25% (for the first time in six years), so there is cause for optimism.

 

To those small businesses I say work harder and market yourselves harder. 4/10

 

(6) Australians Flee UK to Escape Credit Crunch

 

Thousands of Australians who settled in Britain are returning home to escape the credit crunch.

 

Australian authorities have recorded a 50% increase in the number of their citizens returning down under since summer 2007.

 

*Credit Crunch Excuse Rating: At last, a crumb of comfort. 10/10