However, basically, the result of overspending in US has caused cash-flow problems for at least one of UK banks - not sure about others around Europe:
Extract From Sky News:
"Ultimately, the crisis at the riskier end of the US mortgage sector - known as the sub-prime market - is behind Northern Rock's troubles.
The banks' sector has been particularly badly hit by the widespread volatility in international financial markets over the past month.
Record home loan defaults in America among sub-prime borrowers who have poor credit ratings followed a slowing of the housing market and a slump in property prices.
American companies and individuals found it harder to borrow money and fears were whipped up worldwide over the outlook for global economic growth.
So how does that affect the UK?
The shockwaves from this crisis in the American sub-prime sector quickly spread across the Atlantic.
Stock markets have been hit by the one thing they cannot cope with - uncertainty. No-one knows exactly how much the lenders may have to write off, if anything at all.
As a result, billions of pounds have been wiped off the value of shares in companies around the world and banks have cut back on their lending to each other.
This lack of liquidity is what has caused central banks - the latest being the Bank of England - to step in and pump in large sums of cash to ease the credit crunch".
However, basically, the result of overspending in US has caused cash-flow problems for at least one of UK banks - not sure about others around Europe:
Extract From Sky News:
"Ultimately, the crisis at the riskier end of the US mortgage sector - known as the sub-prime market - is behind Northern Rock's troubles.
The banks' sector has been particularly badly hit by the widespread volatility in international financial markets over the past month.
Record home loan defaults in America among sub-prime borrowers who have poor credit ratings followed a slowing of the housing market and a slump in property prices.
American companies and individuals found it harder to borrow money and fears were whipped up worldwide over the outlook for global economic growth.
So how does that affect the UK?
The shockwaves from this crisis in the American sub-prime sector quickly spread across the Atlantic.
Stock markets have been hit by the one thing they cannot cope with - uncertainty. No-one knows exactly how much the lenders may have to write off, if anything at all.
As a result, billions of pounds have been wiped off the value of shares in companies around the world and banks have cut back on their lending to each other.
This lack of liquidity is what has caused central banks - the latest being the Bank of England - to step in and pump in large sums of cash to ease the credit crunch".