Talk:Credit crunch/Archive 1

Omission !

Should make clear the difference with liquidity crisis (it is not the same, confer (in French) ). See also liquidity risk. Thanks. MaCRoEco 10:45, 28 September 2007 (UTC)

Fair point. This has now been addressed. Admittedly, it is one of the most difficult decisions for any business to make: is this a liquidity crisis we can trade through or is this a credit crunch we will only die trying to deny? I don't envy any business having to make this fateful decision. —Preceding unsigned comment added by Karmaisking (talk • contribs) 00:19, 4 October 2007 (UTC)

I agree with MaCRoEco. The definition of credit crunch in the first sentence is describing a liquidity crisis. While a credit crush can cause a liquidity crisis, the difference between the two needs to remain clear. The cite does not define a credit crunch this way either: "A sudden reduction in the availability of loans and other types of credit from banks and capital markets at given interest rates."

By the way, the crisis that occurred in September was a liquidity crisis, not a credit crunch. Banks were still willing to make loans at prevailing interest rates, but the money was destroyed in the sub-prime mortgage fallout. Short-term refinancing procedures seized and business operations were stalled. If the crisis were a credit crunch, the business operations would have only slowed. Personally, I hope that the FED stops lowering rates so that the financial sector can heal correctly. EGeek (talk) 08:26, 21 November 2007 (UTC)

Ahh...my little friend "EGeek" pops up again. With the greatest respect, your comments always tend to go round in little circles (this one is no exception) so I don't quite know where to begin. What, precisely, are you trying to say? And what is the point of your comment? What is your definition of a "credit crunch"? How does it differ from a liquidity crisis? A liquidity crisis can be an early warning sign of a credit crunch, not the other way round. So, what do you mean when you say "While a credit crush [sic] can cause a liquidity crisis, the difference between the two needs to remain clear"? The difference between the two is made very clear in the article. The definition given is a slight twist on the "standard" theme to emphasize the Austrian Economists' view that a "credit crunch" is always associated with a preceding (very, very stupid) growth in credit/debt money and the malinvestment which inevitably results from these poor/reckless/loose lending decisions. The Famous Mogambo Guru does a beautiful job of explaining this in one of the external links (I am so angry that I cannot type with my fingers). I can't do any better than the Guru's pithy explanation, and I recommend it to anyone who wants to know what happened and what is happening and what will happen.

My pathetic attempt to regurgitate The Guru's Words of Wisdom (WOW) is as follows. Very bluntly stated, a credit crunch happens this way: The Big Bad Banking "Masters of the Universe" who previously acted like "Masters of the Universe" suddenly start acting like spineless "Barbie Dolls" and are scared to death to lend to anybody (including themselves) because they suddenly realize (yet again) that they've all mindlessly, stupidly sprayed $X trillion against a wall and it's never, ever coming back. In other words, the incestuous relationship of trust breaks down and banking "brother" starts to distrust banking "brother". They smell it in the air: "One of us is going down! This damn bonus/bonus/bonus party has gone on for way, way too long. Which stupid sucker is going to be taken down this time?!? Could it be...ME??? Hide all our bad debts, somewhere, anywhere! Burn everything! Run and hide! Get my secretary to book two tickets to Geneva/the Cayman Islands/(insert tax haven of choice here) NOW!" This triggers a whole series of cascading failures which then results in a slow down in the growth of credit/debt money which then constricts economic growth - unless an exogenous shock to the system (e.g. war) allows more $$$s to be thrown onto the fire to keep the (insane?) "party" going. The first sentence is a nice attempt at summarizing the key points from these cascading failures into one simple sentence the non-banking public can understand. The non-bank public only cares about two things: (1) what the Hell is going on? and (2) how is this going to affect me? Answer (1): Growth in debt money/credit/lending has slowed. You'll find it more difficult to get a loan. So will everyone else. Therefore, the latest "hot" investment is about to become very, very unfashionable. As unfashionable as cancer. Answer (2): Unless yet another war breaks out (pray it doesn't!) we're going to have a recession. Not because you or I deserve it, but because stupid, stupid lending has caught up with the banks, resulting in a stupid, stupid unsustainable bubble bursting and causing chaos everywhere. The chaos cannot be stopped. It would be like trying to walk on air after you've stumbled off a cliff (think of Wile E. Coyote just before he realizes he's over the cliff and is about to fall. He can't do anything about it. He's already over the cliff). The bubble shouldn't have existed in the first place, so there's no way you can "recover" the losses other than finding another bubble to replace the one that just burst. That's how banks survive and big $$$$ bonuses get paid on Wall Street - finding one "fashionable" bubble after another. Endlessly. Until people get sick and tired of this stupid, stupid childish game. And look to solutions to discipline lenders to ensure they don't lend recklessly in the first place. But that's a whole other story...

Without in any way trying to offend and with the greatest respect, your somewhat pedantic comments, whilst interesting to the banking community (or a pedant, or a linguist) are trivial to the big picture issues. I can't see how they can be (or why they should be) addressed in the article. Karmaisking (talk) 08:19, 26 November 2007 (UTC)

First, I apologize for taking so long to respond. Second, I'm not offended in any way. You have a good point to make about the activities of central banks. Third, I apologize for not being clear. My pedantic point was that the definition given in the article did not match the cite given. To simplify, liquidity is cash, while credit is the availability of cash, or debt money. Again, this is a simplified statement and the definition provided in the cite does a much better job. When you get down to the nuts and bolts of a financial system, subtle differences such as liquidity and credit matter a great deal. But either way, thanks for the reading. I haven't studied any Economic theories from the Austrian School, so this was a treat. Be well! --EGeek (talk) 08:14, 7 December 2007 (UTC)

No problem. It's always important to keep your eye on the ball in a shell game. As long as you can see that lending = credit = debt money = liquidity, that's all that matters. Semantics matter too (especially in Wiki) but it's important to see how the shell game works in a shell game. And the "credit" and "derivatives" markets are, truth be told, 99% shell game. Karmaisking (talk) 22:15, 9 December 2007 (UTC)

Well, my original point was credit ≠ liquidity; although, I agree debt money = liquidity. I will also agree for the sake of this discussion that lending = credit (I have trouble equating verbs with nouns but that is irrelevant). I think its important to know what your game pieces are and how to move them. -- EGeek (talk) 17:55, 11 December 2007 (UTC)

First reference credible? Definition of credit crunch?

The first reference cites the statement that a credit crunch is a recessionary period. Is that referring to a general recession through out the whole economy or just with in a certain sector? Generally when there is a recession of the whole economy, it seems like people like to make a big deal about it, and while it seems like people are certainly making a big about the credit crunch, perhaps rightly so, it only seems like a small segment questions whether we are in an economic wide recession, and in general it seems like people are saying the economy as a whole (aside from deficits, imbalances, etc.) is not doing to bad. Clarity from someone who understands and knows would be appreciated. --Emesee 15:52, 22 October 2007 (UTC)

Reasonable point, and I can understand your confusion, but the article doesn't need amendment. The article should be "timeless" - credit crunches will be around as long as we have the present monetary system, so even though the current credit crunch is the only one people care about right now (no one remembers the early '90s apparently), this article should be applicable for any credit crunch.

The blunt response is: Wait 6 - 12 months. You will then realize that a credit crunch is always associated with a recession. We're in the beginning stages of something that is blowing up before our eyes. We don't know the full extent of the damage. It's unfolding. It's a dynamic process. And it's going to get much worse. Anyone who has any idea what's going on knows we're only just finishing Chapter 1. There are at least 5 other Chapters to read (even if you don't want to read them they will be read to you).

The reason why "credit crunches" are associated with recessions is simple. If the banking system is not "shaken" by the number of foreclosures/bankruptcies it's NOT a credit crunch and the "big boys" in the banking sector and government don't care. They just call it "creative destruction" or "restructuring" or "innovation". You never hear the term "credit crunch" when the steel industry is wiped out, or the farmers have a drought and are pushed off their land, or the local stores are decimated by a big new competitor coming to town. It's too "localized" for the big boys to care. It's just white noise. The "system" is not threatened, so the term credit crunch is never used.

A "credit crunch" only occurs when the solvency of one or more players in the banking system is put at risk due to widespread numbers of businesses being wiped out. Then the banks themselves have to pull back on lending to protect their balance sheets. This reduces the volume of new loans approved. This reduces the growth in the money supply. This produces a recession. Q.E.D. —Preceding unsigned comment added by Rememberkarma (talk • contribs) 03:11, 24 October 2007 (UTC)

I believe that credit crunch is a new term that has been generated by the media. If this is not the case then a citation to usage from pior to the current economic issues should be given. Moreover since is only used commonly used to refer to the current situation it refers only to the current situation. It may well be that recent articles have named prior economic problems credit crunches but adequate language existed prior to 2000 to describe these events and I would suggest that in these cases the term is being used to create dramatic effect. If we apply new terms retrospectively to situations where previous language was adequate we lose the previous language, that has stood the test of time to replace it it more generic terms. This makes language less effective. Time will tell if in future the term is adpoted to refer to future events. I suspect that the term credit crunch will in future become more analgous with the term Wall street crash than credit squeeze. In short citations should be given to back up the usage of this term as being generally applicable rather than applicable only to the current economic events. —Preceding unsigned comment added by Wiki-name-policy-is-stupid (talk • contribs) 11:00, 18 September 2008 (UTC)

I came across the term in an old (1996) book and on a bit of rsearch found that the term dates from "The Credit Crunch of 1966". There was another in 1990-92. Someone with more time than me may like to follow these links... ( http://research.stlouisfed.org/publications/review/69/09/Historical_Sep1969.pdf http://research.stlouisfed.org/publications/review/92/09/Credit_Sep_Oct1992.pdf ) ...and even their citations for Kaufman and Wojnilower, which promise to expand on the history of the term and previous crunches. Arguments of definitions are also given. Alternatively just google credit cruch 1966. I look forward to some revisions. - nick —Preceding unsigned comment added by 92.236.48.134 (talk) 19:46, 1 October 2008 (UTC)

A new section on definitions and history would be intersting in the main article, dont you think?Littlebluenick (talk) 20:02, 1 October 2008 (UTC)

External links

The links have got to stop. Wp is not a personal blog, nor is it a news aggregator. These links and the (wise-ass) commentary going with them) have been deleted. Its time to start this anew.Montco (talk) 00:27, 11 December 2007 (UTC)

Cannibal Montco, this is the number 1 google search for "credit crunch". Lots of people are reading it. It's fun and educational at the same time. Should one person spoil all the fun? Particularly if that one person is a compulsive history-eraser, cannibalizing himself and lots of other articles (check out Cannibal Montco's history on his talk page...it's a treat!). For the last time: Put down that knife and fork and stop eating yourself and others. Karmaisking (talk) 03:18, 11 December 2007 (UTC)

I think those comments are a little much. It's not very professional even for Wikipedia. -- EGeek (talk) 17:55, 11 December 2007 (UTC)

Cannibal Montco knows the deal. He can eat EITHER debt money or credit crunch. Not both. He decides.--Karmaisking (talk) 02:36, 12 December 2007 (UTC)

Comments of that nature are grossly inappropriate and unbecoming of a Wikipedian. I've (briefly) discussed this with you on your talk page, but wanted to leave a note here, as well. Discourse is good, but let's all remember to keep a cool head. – Luna Santin (talk) 08:18, 12 December 2007 (UTC)

My head is cool. OK, it's melting slightly - but still cool. If someone runs around deleting stuff he/she/it doesn't like without any reasonable basis given for the deletions - and then keeps doing it, on a number of related sites - what do you do? And how do you determine whether those deletions were reasonable or not? And who decides?--Karmaisking (talk) 11:24, 12 December 2007 (UTC)

Thank you -- I appreciate it. As far as the rest, I personally should avoid advocating in the dispute itself (acting as a neutral admin, hopefully), but you might consider dispute resolution if things keep heating up. Possibly the best move for everybody is to get some more people involved, so that opinions are more diverse and feelings are less likely to become personal. Sound like a good idea? – Luna Santin (talk) 18:28, 12 December 2007 (UTC)

I've added a small (minimal) number of additional non-"wise-ass" external links that would be very helpful for economics and finance students to access. I assume no one has an issue with these. Please make a comment if you do.--Karmaisking (talk) 11:26, 13 December 2007 (UTC)

Third opinion

Wikipedia:External links gives the guideline on external links to be used on Wikipedia. The amount of links on this article are excessive. The way the links have been presented is not in keeping with the project. The editors are advised to read WP:POINT, and also understand the difference between in-line citation and external links. I have looked back for the tag requesting more references, it is this one: {{refimprove}}, which was placed on the article on 16 September - the tag does provide a link to the Wikipedia:Citing sources guideline, which deserves to be read. Wikipedia has many guidelines, and it's a rare editor who has read them all or follows them all or understands them all. Most of us do things at times which run counter to consensus, but with no real malice or bad intent. However, this article now needs to have the external links trimmed back, and to have appropriate sources placed inline to support statements made in the article body. If people would like assistance with selecting which external sources should remain in the article, and how to use inline citing, please get in touch with me. Regards SilkTork *^SilkyTalk 23:30, 11 December 2007 (UTC)

The links

I've taken a look at the external links and I'm not clear why any of them are on the article. My suggestion would be to remove all of them at this stage, and only put an external link on the article after first posting it on this talkpage and giving a reason for its inclusion. If there are no objections after three days, or there is significant agreement to include the link, then it may be placed on the article. I would prefer to remain in an advisory capacity on this and not get directly involved in editing the article myself. SilkTork *^SilkyTalk 01:33, 12 December 2007 (UTC)

Perfectly reasonable comments. The smart-ass comments have to stop and will stop. This is getting serious.--Karmaisking (talk) 02:33, 12 December 2007 (UTC)

I could not believe the external like on there before, some of them so irrelevant I don't know how they got on there? Which is why when I had my suggestion link removed, it was disheartening. As the comments say above, wiki-p is not a blog, or a discussion forum on this topic. There is a clear need for the use of such a forum. The remaining 2 links, link to information resources only. I would like to suggest the following http://www.creditcrunch.co.uk/forum/ as a link to a chat base for people of the UK wanting to exchange points of view on the topic. I won't ad this myself, and will leave it to the Wiki-Mods to decide. —Preceding unsigned comment added by 132.195.139.2 (talk) 19:03, 12 December 2007 (UTC)

NYC Housing Bubble has been deleted by "Gregalton". "HarryKo" wanted to leave it in. Gregalton deleted it again. I support its retention. It is a fantastic source for up-to-date information on the current credit crunch, intelligently put together, easy to read, comprehensive in its scope. Check it out. Anyone else have any comments?--Karmaisking (talk) 12:05, 28 December 2007 (UTC)

"HarryKo" tried again. "EGeek" (sensibly) deleted until the issue is resolved. Does anyone have a REASON for its deletion? It's not pushing a product. It's a terrific resource for students. If someone doesn't come up with a good reason why it should remain deleted, I will put it back in.--Karmaisking (talk) 11:19, 29 December 2007 (UTC)

No one's said nuttin' about this for days. I'm proposing to put this one up and PrudentBear.com - which is the gold standard bear website. This should be OK given the complete lack of response to the comments above.--Karmaisking (talk) 07:14, 10 January 2008 (UTC)

Blogs usually are not considered a reliable source about an academic subject; therefore it should be excluded from the article. I'm sure a better source exist on this subject somewhere. --EGeek (talk) 19:53, 10 January 2008 (UTC)

I also think Prudent Bear fails as a reliable source. The footer shows the following: "This is the website of David W. Tice & Associate, LLC, investment adviser to the Prudent Bear mutual funds and other privately offered investment funds." --EGeek (talk) 20:39, 10 January 2008 (UTC)

I've come across another link which would be useful for people finding out the latest news on the crunch its http://www.globalcreditcrunch.org - theres lots of information there. —Preceding unsigned comment added by NKDurrani (talk • contribs) 16:36, 1 May 2008 (UTC)

Clo118 (talk) 15:24, 3 October 2008 (UTC)The credit crunch has slowly wreaked havoc on the finances of the public since September 2007. Financedaily.co.uk have covered many of the credit crunch effects and may also be a useful source of external information.

Editor of the Year Award

Announcement: The 2007 WP Editor of the Year Award goes to "stutterer" Gentleman Gregalton, who STILL doesn't see the stuff up he caused in the first sentence on this now-slaughtered page. Good work, mate.--Karmaisking (talk) 04:11, 21 December 2007 (UTC)

Fixed. At least I can figure out the difference between a blog and a reliable source.--Gregalton (talk) 04:13, 21 December 2007 (UTC)

This is getting childish and embarrassing. I'm just going to leave it now to see how long it takes for Gregalton to work out what he's done.--Karmaisking (talk) 14:03, 21 December 2007 (UTC)

Yes, your silly attacks and attempts at sarcasm have been childish.--Gregalton (talk) 15:39, 21 December 2007 (UTC)

Oh My God Gregalton is frustrating. Blind but self-righteous at the same time. The silly error in the bland, sterile, anodyne, copy-cat first sentence is STILL THERE.--Karmaisking (talk) 08:06, 22 December 2007 (UTC)

So what was preventing you from fixing a typo? Prefer to whine and complain?--Gregalton (talk) 14:13, 22 December 2007 (UTC)

Kellogg's Credit Crunch?

There is an assertion that the curent credit crunch is referred to as the Kellogg's Credit Crunch. Grateful a source, the reflink has no such term. (And apologies if I mistakenly thought it vandalism).--Gregalton (talk) 14:48, 28 December 2007 (UTC)

Dearest Gregalton, I believe you have misunderstood. This was (obviously) a very weak attempt at humor (Kellogg's cereal...Crunch...get it?). No such thing exists. Really. Truly.--Karmaisking (talk) 11:16, 29 December 2007 (UTC)

I was giving a new editor benefit of the doubt after he reverted - instead, it turns out he's just a vandal or schoolboy. I notice you specifically refer to the same editor's support for retaining a link above; we should discount that support appropriately.--Gregalton (talk) 12:42, 29 December 2007 (UTC)

Merge from Credit squeeze

Distinction between is not clear, and would benefit from having one less page around on the identical topic.--Gregalton (talk) 22:12, 10 January 2008 (UTC)

Dearest Gregalton, it's so funny that it took you soooo many months to delete the reference to debt-based monetary system embedded surreptiously in credit crunch! Finally. I was wondering when you'd panic when you discovered it. How terrible that it was there all along, just sitting there, waiting for you to notice! Your attention to detail leaves a lot to be desired.

Gregalton, you know very well from your repeated "edits" (deletes?) on debt-based monetary system that there is a distinction. "Crunch" is a cessation of lending in some debt markets FULL STOP. "Squeeze" is where debt is still being issued but with stricter requirements, resulting in a slow down - but NOT a complete cessation - of lending activity. Imagine a tap. One is where the tap is turned off. People starve, there's chaos in the streets, asset markets collapse... you get the picture. The other is where the tap is turned to "boiling hot" so only those with 18 carat gold gloves on can receive this precious liquid called debt money...whoops!...sorry, that concept has been killed off by Gregalton and a few other WP guardians. Err...precious liquid called... liquidity? How's that sound?

Where the tap is turned to boiling, this generally only results in a slow down in economic growth and a contraction in prices in some isolated asset markets. Those asset markets that were receiving "easy money" prior to the squeeze get jammed but generally the economy hums along OK, with isolated pockets of distress.

I recommend someone work on credit squeeze to bring it up to WP standards, not merge it to bring it down to the standard currently "enjoyed" on the credit crunch page. They are different concepts. Really. Truly. --Karmaisking (talk) 22:37, 10 January 2008 (UTC)

Which academics make this same distinction? BigK HeX (talk) 17:30, 12 February 2008 (UTC)

There is no real difference in meaning. How you perceive a crisis in the credit system depends on what your exposure is. If you're a bystander it's a squeeze. If you lose your house it's a crunch. In my opinion (1) the two articles should be merged; (2) credit squeeze is a much better established term, credit crunch being less formally used, and so credit squeeze should be the main name; (3) those that claim a difference in the meanings do acknowledge that crunch would be, in their reckoning, a sub-set of squeeze, therefore credit squeeze should be the main name of the one article; (4) editors should note that no one owns any article and should not claim some kind of proprietary privilege over the verbiage they have *irrevocably* contributed to the common good; (5) editors should stop personalising this issue. Merge the articles! Really. Truly. Paul Beardsell (talk) 18:47, 18 February 2008 (UTC)

Thanks for the input. Any opposing opinions? If not, we can begin merge. (I agree that this is just a question of degrees).--Gregalton (talk) 08:35, 20 February 2008 (UTC)

Don't Merge. Actually, there is a formal difference between credit crunch and credit squeeze. In this paper the World Bank debated whether the financial crisis in southeast Asia was a credit crunch or a credit squeeze - making a distinction between the two. They indicated that a credit crunch would slow the transfer of capital to export related industries and slow the expected recovery following a currency devaluation.(page 4) This paper also uses a 1991 definition of credit crunch from the Council of Economic Advisers.

"credit crunch is 'a situation in which the supply of credit is restricted below the range usually identified with prevailing market interest rates and the profitability of investment projects.' When a credit crunch occurs, it alters the relationship between credit availability and interest rates. A credit crunch mostly occurs in two forms: (i) a leftward shift of the credit supply curve at a given interest rate level (price mechanism), and (ii) rationing of the credit supply, irrespective of interest rates (non-price mechanism...)"(page 6)

A credit squeeze has a similar effect (more difficulty to borrow money), but still correlates with interest rates. A credit squeeze generally occurs when interest rates rise. A credit crunch generally occurs when less capital is available, which "changes the relationship between credit availability and interest rates."page 7 --EGeek (talk) 07:00, 21 February 2008 (UTC)

Excellent! An actual definition that distinguishes! (And you did it without mentioning Ron Paul, the inevitable collapse of Western society, or the role of gold/fiat money in preventing/creating dictatorships and the common cold!:) I think this merge proposal can be retired. Hope we can now integrate these texts. Thanks.--Gregalton (talk) 07:42, 21 February 2008 (UTC)

Before deciding whether to merge the credit squeeze article a decision needs to be made on whether or not the author of this article is correct in his assumption that credit crunch is a generic term rather than a new term currently applicable only to the current situation. If the author is correct in his assumption then a lot of work should be done to define the boundaries of the two terms. I suspect that the term credit squeeze has been used historically to cover situations the author of this article is calling credit crunch. If the author is not correct the the term credit squeeze should remain. —Preceding unsigned comment added by Wiki-name-policy-is-stupid (talk • contribs) 11:24, 18 September 2008 (UTC)

Why the financial models don't work

For the four people who are interested, I had a theory a few years back on "bifurcating bell curves", where towards the end of any Ponzi-like (Hyman Minsky-style) debt-induced bubble, the expected returns "bifurcate" into two SEPARATE normal curves: either "highly positive" or "highly negative" (i.e. hyperinflation or strong deflation). It went nowhere because I was considered insane by those who took the time to listen to me. Now, it doesn't seem so crazy. Has anyone seen anything published or reviewed in the academic literature (other than Minsky) that has considered this "bifurcating" dynamic? Taleb's black swan theory is different - he just argues that the bell curve distribution doesn't work in financial markets but doesn't replace it with anything else (i.e. you're "flying blind" with the distribution being a horizontal line across the returns spectrum, with "low probability" events on the normal curve actually having a higher probability in real life than the normal curve represents). This theory is different. At the end of the debt-induced bubble, the returns actually collect EITHER around hyperinflation OR deflation (two separate bell curves). Like the dynamics towards the end of any frenzied, crazy "Ponzi-like" Hyman Minsky bubble. Someone should work on this. It could save you a few billion if you got it right.

Just some happy bedtime thoughts for the Wall Street geeks out there.--Karmaisking (talk) 07:58, 12 February 2008 (UTC)

Welcome back Karmaisking. The financial crisis in the U.S. is deflationary. Money was destroyed when the value of SIVs backed by sub-prime loans plummeted; however, no signs of deflation have occurred yet due to the weakening disinflationary pressure of emerging economies. Greenspan stated last year, that the disinflationary pressure of globalization has started to decrease as emerging economies are maturing.[1] China, the United State's largest cheap importer, stated the other week that its government will start to focus on its domestic economy and transition the country away from its dependency of a foreign trade surplus. This means that cheap goods will discontinue as rising wages inside the country grow its domestic market. This weakening disinflationary pressure may be hidden by the current deflationary financial crisis. If this is true, then the U.S. could be headed for higher inflation after the current crisis resolves unless the Fed acts quickly to raise interest rates; although, it probably won't because of the difficulty of timing the end of the crisis and an economic recovery similar to the post-2001 recession. So I think there will be a period of large inflation, but not because of the crisis. --EGeek (talk) 06:05, 14 February 2008 (UTC)

Your comments are interesting and may well be correct, however they don't really address the point I was making, regarding the gross, almost embarrassingly obvious, errors in the "academic geek created/mindless computer driven" financial models currently used around the world. The most similar "theory" to the one I've postulated above comes out of this piece from "The Prophet" Robert K. Landis, where he predicts a combined deflationary/stagflationary financial crisis. Ludwig von Mises obviously had similar ideas, but no one has really done the "hard" financial modelling on this Austrian School theory, and tried to collect long-term historical data, tracking changes in debt levels over time and attempted to correlate this with increasing levels of volatility in financial markets (i.e compared increasing debt with the frequency and severity of so-called "black swan events"). My hypothesis is that with increasing margin lending and debt levels, you will see bifurcating bell curve returns (i.e. extremely high returns or extremely negative returns, with few data points in the range of the long term mean during these periods of heavy net indebtedness). If correct, this Ponzi-like dynamic would blow apart most of today's financial models. But real life seems to have done that anyway, with some of the choas we're seeing being 1 in 100,000 year events according to some geek-created financial models (yeah, right).

Landis comes close, but still no (Cuban) cigar. Anyway, his piece is very topical right now, and made for interesting bedtime reading, tucked away here as I am in my tiny little third class cabin, far far away from the "mad money" crowd.--Karmaisking (talk) 10:23, 14 February 2008 (UTC)

Problem solved?.--ThePosthumousAward (talk) 03:01, 30 July 2008 (UTC)

Is this original research?

Not to start off by citing policy, but I read this and felt that dull thud of WP:NOR as I got to the end of the article. I realise, accept and understand that 'credit crunch' is a much-used term over recent months, much as is its counterpart (?) 'credit squeeze'. However, I observe that both articles were created circa mid- to late- 2007 ie. in recent months. Taking this article, it has the approach of a theoretical treatise on what a 'credit crunch' is and why one may occur. It does not back this up to an acceptable degree with academic or other economically-authoritative sources. The best it's got is an FT article. This is because there are no text books, no journal papers, no lecture notes or anything of that sort available to help write an encyclopedic article at present. It is an original synthesis of observed effects in the media, a couple of which have citation to newspaper stories. Things like diagnosing that they often follow a period of loose credit is to reverse engineer the current situation to produce a novel, if predictable, notion. There are other examples, too. This kind of original synthesis is exactly what WP:NOR forbids, unfortunately. I see two routes out of the conundrum of wanting an article on the credit crunch whilst trying to write about ' all ' credit-crunches (of which I speculate there have been no other events so named):

1. Somebody proves me comprehensively wrong and finds authoritative, academic, or otherwise peer-reviewed sources we can cite in this tertiary source. (My preferred route).
2. This is rewritten to discuss the proceedings of the present financial turmoil, and is mercilessly stripped of the imputations, interpolations and extrapolations it currently possesses. This will probably result in merging/redirection with/to Subprime mortgage crisis, but might not since its scope is gradually widening to be more than just a subprime-related issue.

Along the way, I'd think the same problems lurk in credit squeeze and liquidity crisis, both begun around the same time as this article. Splash - tk 22:08, 17 March 2008 (UTC)

No, it's not original research. The references are now comprehensive and virtually every sentence has citations. I particularly recommend the recent well-researched book by George Cooper, which supports virtually all the statements on this page. Thanks for your concerns though; it probably prompted others to provide more citations than most other WP articles. Given the topical nature of this issue, that's no bad thing.165.228.245.66 (talk) 23:02, 16 September 2008 (UTC)

I agree with splash. The first line states "Credit crunch is a term used to describe a sudden reduction in the general availability of loans (or "credit"), or a sudden increase in the cost of obtaining loans from the banks." This surely is an assertion that needs to be backed up with citations from sources that were written prior to the current situation and should refer to the words "credit crunch". —Preceding unsigned comment added by Wiki-name-policy-is-stupid (talk • contribs) 11:29, 18 September 2008 (UTC)

Read EGeek's comments above. As an interesting aside, it is amazing how many latecomers want to make comments and edit pages without reading the talk pages first. Evolution in reverse or simply going 'round in a circle? It reminds me of Keynes copying Gesell and then being hailed as a genius. I vote for "reverse".

External links

I have removed a number of external links to websites and blogs that do not seem to meet WP:EL for added resources or authority. One website in particular has been removed and readded numerous times. It seems would be more helpful to discuss here why these links provide unique added resources rather than continue the cycle of add and remove. Flowanda | Talk 12:31, 29 June 2008 (UTC)