For SMEs, a shortage of customers, not a shortage of credit, constrained borrowing, employment, and output. And the customers were absent because the pre crisis credit boom had left them over leveraged.

And boom, boom, boom. The president of Mongolia.

As a result, households want to spend less and pay down their debts. To some extent, this is the natural aftermath of any credit boom.

In Europe, the pre crisis boom in real estate investment was fueled by reckless credit flows from Northern to Southern Europe. Credit rationing has followed, as banks reduced their overburdened balance sheets and were discouraged from risk taking.

Economic growth can indeed continue to be severely depressed by a debt overhang even when credit supply is unrestricted and cheap. Many Japanese companies were left overleveraged by the boom and bust in credit and real estate in the 1980s and early 1990s.

Southern eurozone countries such as Italy and Spain have suffered from rising competition with China in textiles and light manufacturing industries. But just as the pre crisis credit boom masked underlying structural problems, post crisis credit constraints have greatly amplified the downturn.

Huge boom. Huge boom. Huge bust. Huge bust.

And they go up to the cath lab and boom, boom, boom get rid of the clot.

Consider China s high leverage ratio, which many argue will be a key factor in causing a crisis. After all, they contend, developing countries that have experienced a large scale credit boom have all ended up facing a credit crisis and a hard economic landing.

Many forces behind the boom of the 1990 s, including advances in technology, were set in motion before Bill Clinton took office (just as the legacy of President George W. Bush s deficits will be felt long after he leaves). So Greenspan cannot be given credit for the boom.

Moreover, the extreme weakening and then tightening of credit standards seems particularly prominent only in the US, while the housing boom bust cycle is prevalent throughout much of the world.

Boom.

Banks magnify the boom by making credit too easily available, and they exacerbate the bust by withdrawing it too abruptly. But the legacy is a more efficient stock of capital equipment.

Asia s Invention Boom

In some countries, most notably the US, a private sector credit boom created jobs in low skilled industries like construction, and precipitated a consumption boom as people borrowed against overvalued houses. In other countries, like Greece, as well as under regional administrations in Italy and Spain, a government led hiring spree created secure jobs for the moderately educated.

China s remarkable growth has been financed recently by a rapid expansion of money and bank credit that is producing an increasingly unsustainable investment boom. This renews concerns that the country may not be able to avert a replay of the painful boom and bust cycle such as the one it endured in the mid 1990 s.

If you saw 2001 A Space Odyssey, and you heard the boom, boom, boom, boom, and you saw the monolith, you know, that was Arthur C. Clarke's representation that we were at a seminal moment in the evolution of our species.

Germany s Pathological Export Boom

Long Live China s Boom

Harnessing the Remittance Boom

But the comparison is misleading, because 2007 was the peak of a credit bubble that led to a lot of wasteful investment. The Commission recognizes this in its supporting documentation for the Juncker package, in which it argues that the pre credit boom years should be used as the benchmark for desirable investment levels today.

US financial institutions should have continued to lend to distressed borrowers, in order to prevent a spiral in which credit rationing forced price reductions and intensified world deflation. Instead, US banks, widely blamed for the international lending boom that preceded the bust, were so intimidated and weakened that the flow of American credit stopped.

Even if a bailout plan were implemented quickly which appears increasingly unlikely there would be some credit contraction. The US economy has been sustained by a consumption boom fueled by excessive borrowing, and that will be curtailed.

Pulls out a gun. Goes boom!

Boom. No ifs, ands or buts.

Credit Where Credit is Due

Now, since that time, we've actually been through an extraordinary boom, the longest boom ever in the history of this country.

A German Glimmer in a Global Boom

We're seeing a population boom with crows.

These are the boom and bust refugees.

And then one day, boom, we retire.

In the 1990 s, Argentina tied its hands with a dollar pegged currency in order to enhance its credibility as a borrower. The strategy worked too well the large credit inflows that it attracted triggered an inflationary boom that reduced the country s competitiveness.

Nothing else ultimately explains lenders immense willingness, in the boom up to 2006, to lower their credit standards on home mortgages, regulators willingness to let them do it, rating agencies willingness to rate mortgage securities highly, and investors willingness to gobble them up.

Cameron Sinclair The refugees of boom and bust

The collapse from 2007 to 2009 of equity, credit, and housing bubbles in the United States, the United Kingdom, Spain, Ireland, Iceland, and Dubai led to severe financial crises and economic damage. So, are we at risk of another cycle of financial boom and bust?

This key difference between the US and (continental) Europe explains the resilience of the US economy to the collapse of its credit boom. The excessive debt accumulated by households has been worked off much more rapidly and, once losses have been recognized, people can start again.

Credit

Credit

A national highway construction boom was added to our problems.

We know that there's boom and bust cycles of hunger.

Low interest rates eventually jump started the expansion through a house price bubble that supported a debt financed consumer spending binge and triggered a construction boom. Meanwhile, prolonged low interest rates contributed to a chase for yield in the financial sector that resulted in disregard of credit risk.

Unfreezing Credit

Rural Credit

Financial Credit

This way public credit registries and credit bureaux may be able to operate and provide adequate and up to date electronic credit information.