The Credit Crunch Continues...

People are still finding credit difficult to obtain in the UK. Proof of this is the 3.5 million credit card applications and 1.6 million unsecured loans rejected over the course of the past six months. Even people with security are being denied credit, as over one million loans were declined even though the person requesting them had collateral.

Personally I think this is a good thing. Reliance on credit during the boom years allowed people to grow their debt until it got unmanageable, and the pendulum these days is merely tipping in the other direction, and this is so even here in South Africa. Not even two years ago, banks were throwing around money as if it were almost worthless. In the current situation, credit is something that even those with money are finding hard to get. It is almost as precious as gold.

Speaking of gold, even those countries with massive amounts of natural resources, like Ghana, are finding money tight. Ghana last year had been able to raise $750 million to prospect for oil in a newly found field in the west of the country. Today, there is no way the Ghanan government would be able to raise that amount of funds.

In the US, the federal reserve's aggressive actions have kept the credit market relatively strong, with the exception being the housing market. The policies that the US government has taken have allowed banks to lend, and interest rates have remained generally low. Interest by investors in the Asset-Backed Lending Facility has picked up in May and June to levels not seen since last fall. This is good news for the biggest economy in the world, and perhaps a ray of hope for the future of the entire world economy.

Africa generally has not been hit hard, though unlike the South African economic guru Trevor Manuel's opinion about the economy earlier in the year, South Africa has dipped into a recession during the last two economic quarters. People here are talking about the World Cup next year, and the building of infrastructure can be seen everywhere here in Cape Town. People are generally optimistic, and looking forward to the next year, when an influx of tourism in an otherwise weak part of the tourist season is slated to bring in billions of dollars.

South Africans are taking the credit crunch in stride. There has even been a new book called "Beat the Crunch," which gives hints to consumers on how to save and cut costs during this recession. That's one way to make money in the current economy: by explaining frugality to a generation that has never known it.

Now... the credit crunch in Cape Town, South Africa brings on a whole different meaning. Though banks here have begun to keep a tighter reign on their money, it has given one comedian here material for a show called simply "Credit Crunch." So among all this dismal news, there is still a reason to laugh...