“Credit bubbles are created during euphoria and busts during financial turmoil.” Well it sounds good but then why are they created first and who is responsible for it? The answer is we common people, we are the one’s who over emphasize things when the going is good and vice-versa. Nevertheless, the ultimate sufferer of these bubbles is the common person who loses all his savings and loses trusts.

 

Using plastic cards by American consumers and reducing interest rates in times of financial turmoil was the reason for this situation then who will save emerging economies who are impacted and to safeguard their economies they have started reducing interest rates, What will be it’s impact on the economy in the long run? People have lost faith, Banks don’t want to lend, defaults have not yet started in India but if the situation don’t improve then it won’t be too long before a bubble bursts in India as most of the middle and lower middle class have started using plastic cards and living a lavish life.

 

It is high time for all of us to understand our own financial position and time to play safe rather than having a lavish life, It’s time to save and cautious. If things do not improve in few months then many job cuts and distress will be seen which will have an impact that could take years and years to redeem confidence.

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