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THE CREDIT CRUNCH, ACCORDING TO HOME http://www.youtube.com/watch?v=wGxmgwUWNr0

OK. It all started in the _________ _________. In the beginning, ________ and other lenders were doing well. Interest rates were __________ and cheap loans were _____________. They lent money and took on debt with no worries. They were doing so well that they had more money than their __________ wanted to borrow. So they looked for new ______________ to lending. They found the subprime market. Subprime means people on low ______________. People who’d not been able to ________________ money before and people with a poor credit history. In short, unreliable borrowers. So the bank started ____________ money to these new risky borrowers. Many of them bought ______________ and the bank took on the new subprime debt. The lenders also bundled some of their debt and sold it on to other ______________ and investors around the world. They said that they’d sold mortage-backed securities(=valores) and it seemed like a good idea at the time because they thought that house _____________ would always ____________. Then things started to ______________. The housing market cooled (= se desaceleró). Interest rates started to rise and cheap loan deals _____________. This meant people started to fault on their mortgage repayments (=pagos de deuda hipotecaria). Investors started to _________ __________ to the risk. The party was over. People with subprime mortgages faced negative equity (= reducción de valor patrimonial). This __________ that lenders could no longer guarantee that their _____________ would be paid back. The banks and other lenders had to write off (=dar por perdido) billions from their balance sheets (= balances generales). The cost of borrowing went up and lending became __________. And so, this made it difficult for money to __________ around the world. And that was the credit crunch(economic recession -> contracción del crédito), according to Home.


KEY OK. It all started in the United States. In the beginning, banks and other lenders were doing well. Interest rates were low and cheap loans were available. They lent money and took on debt with no worries. They were doing so well that they had more money than their customers wanted to borrow. So they looked for new markets to lending. They found the subprime market. Subprime means people on low income. People who’d not been able to borrow money before and people with a poor credit history. In short, unreliable borrowers. So the bank started lending money to these new risky borrowers. Many of them bought houses and the bank took on the new subprime debt. The lenders also bundled some of their debt and sold it on to other banks and investors around the world. They said that they’d sold mortage-backed securities(=valores) and it seemed like a good idea at the time because they thought that house prices would always rise. Then things started to change. The housing market cooled (= se desaceleró). Interest rates started to rise and cheap loan deals disappeared. This meant people started to fault on their mortgage repayments (=pagos de deuda hipotecaria). Investors started to wake up to the risk. The party was over. People with subprime mortgages faced negative equity (= reducción de valor patrimonial). This meant that lenders could no longer guarantee that their loans would be paid back. The banks and other lenders had to write off (=dar por perdido) billions from their balance sheets (= balances generales). The cost of borrowing went up and lending became scarce. And so, this made it difficult for money to flow around the world. And that was the credit crunch (economic recession -> contracción del crédito), according to Home.

THE CREDIT CRUNCH  

VIDEO-LISTENING ABOUT THE CREDIT CRUNCH

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