Understanding the Current Credit Crisis

If you want to get some kind of understanding of the current credit crisis, you need to read this article from The Economist of this week.

When a Flow Becomes a Flood http://www.economist.com/displaystory.cfm?story_id=12972083

The eye opener for me was this graphic: I have to confess that I knew a lot that goes behind that graphic but I didn't have the vision that this simple chart gives. http://www.economist.com/images/20090124/CBB721.gif Turn to the final page of any edition of The Economist and you will see a table Trade, exchange rates, budget balances and interest rates. In that table you will confirm what that graphic says and in the 24th - 30th January 2009 edition, the US Current Account Balance for the latest 12 months is $697.9 BILLION. Fear not, Britain' got the third biggest negative current account balance, albeit at a mere $45.6 BILLION after Spain's $164.1 BILLION.

You will also see quite a bit about the financial side of the developing world and how they have been financing some of the developed world.

The question still remains, however, where on earth has the US put this money? Is it in a depository in the Gulf Of Mexico along with its Oil store? Astonishing!

DW