For the last few days the financial markets around the world have been on a roller coaster ride. The financial crisis stemmed from the housing boom and the dubious mortgage-backed securities that were brought and sold. For the common man words like assets, liabilities, derivatives and financial instruments have no meaning. What does getting a mortgage from a local bank has to do with the all these big financial giants? Most of us think the bank lends money out from all the money that is put in savings by its customers. Who would ever thought that if the banks themselves borrowed or raised money by selling off these mortgages?
The credit crisis started a year ago by the decline in the housing market has come to blow at the end of this summer where companies filing for bankruptcy, workers losing their jobs and those who had invested with this companies having to line up with others to see if they will see recover any of their dollars once the balance sheet is sorted out.
In the time when transactions can be committed in a blink of an eye, a trader sitting in Hong Kong can buy/sell with a trader on the other side of the world, the collapse of these giants have had repercussions all around the world. The markets which started tumbling on Monday morning in West were followed by similarly by the markets in the east, it's become a global disruption around the world with no one knowing what the final impact of the fall of these giants will be. Will your savings in your local bank be safe from the fallout of this financial crisis?
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