Credit crisis affects everyone

While for many Dutch people the summer of 2007 turned out to be unprecedentedly sunny, there were already various signals for financial experts that an international credit crisis was imminent.

Credit crisis affects everyone

Signs that banks needed extra money to finance mortgages or unexpected loss reporting caused stocks to lose value across the board, worldwide.

The exact causes are still under discussion, but it is certain that confidence in the financial market and mutual confidence in financial parties could be further sought and now, July 2008, still is.

The credit crisis in the Netherlands

However, what surprised many Dutch at the beginning of 2008 is that everyone is affected by the international credit crisis. For example, it is becoming increasingly difficult for companies to borrow money for investments, not only self-employed people who want a loan, but also companies with a turnover of millions of euros.

Due to the lack of new investments, it remains difficult for these companies to grow further with all the consequences that entails. Growth plans have to be put in the fridge while profits often have to continue to grow, a logical consequence of many layoffs as part of austerity rounds. For example, the Swiss bank UBS already laid off 5,500 employees in May 2008.

If the international credit crisis continues, house prices will also come under further pressure, which is interesting for new homeowners, but existing homeowners could run into problems.

Pension funds, which invest money for our Dutch pensions in order to eventually make more of them, have already suffered considerable losses thanks to the credit crisis. Insurers also find it more difficult to make a profit on their investments, with the prospect of an increase in policy costs.

Dutch banks have suffered small losses, their investments turned out to be worth less or could not be recovered. In contrast to other countries, there has therefore been no run on savings that the Dutch have in the bank. This does not have to be done immediately, because the savings balance is safe up to 20,000 US dollars, even if a bank should go bankrupt.

Because banks have become more cautious, people with minimal incomes or a BKR registration are much more difficult to obtain a mortgage or loan. Which in turn causes a decline in the demand for houses and causes house prices to drop.

The downside of the credit crisis

As a great footballer once said, "Every disadvantage has its advantage." For example, thanks to the credit crisis, Dutch consumers can park their savings at the banks at very high interest rates. These banks are desperate for savings now that banks lend each other less money out of distrust.

The significant depreciation of the US dollar against our US dollar is also a great opportunity for a cheap trip through America with of course the necessary "stop & shop" points.