Warren Buffet, one of the world’s richest men, has said that the credit crunch is easing, at least for Wall Street institutions, if not for the average man and woman. This is welcome confirmation of our views that the credit crunch is starting to bottom out now.
If Wall Street is starting to feel the green shoots of recovery, however small, than banks and finance companies in the UK should soon rebuild their confidence levels too, which is good news for us all.
In fact I was discussing the situation in the City with a friend last week. She is a human resources manager for a large finance house and has had to lay off many city workers over the last few months. Two directors were made redundant last week, apparently, which shows how serious the problems are in the City.
However her company is now seeing confidence levels between financial institutions increasing slightly and the credit crunch problems are starting to ease. The company is now consolidating their position so that they can grow again as the finance industry regains its feet. This supports Warren Buffet’s views about the credit crunch recovery, but from a UK perspective.
Whilst a slight recovery in the City is good news, it will take many months for things to improve for those with mortgages or those looking to re-mortgage or move home. We can expect difficult borrowing conditions for the next year, if not longer, in my view.
Maybe we are at, or near, the bottom of the credit crunch now. If so then things should slowly start to improve for all those home owners and mortgage holders feeling the pinch at the moment.