The recent sub-prime mortgage crisis in the United States is beginning to threaten other non-related businesses in the economy.
A report on the BBC.co.uk news website 3.5.07 stated that mortgage lenders who specialise in the sub-prime end of the market (borrowers who have difficulty in raising finance because of poor credit ratings) have been hit hard of late with more and more people on their loan books defaulting.
GMAC, General Motor's(GM) lending arm has also been caught up in the crash which has led to losses of $305m or £152m. Having recently been overtaken by Toyota as the world's largest automotive manufacturer, GM is in the middle of a restructuring programme which may yet see a culling of some 34,000 jobs and the closing of twelve production plants.
Losing more than $10bn in 2005 and a further $2bn in 2006, GM needs to get back into the black very quickly and the crisis in the mortgage market is definitely not helping. Rising interest rates sparked the initial problems as more people began to default on the repayments and left GMAC exposed to sudden difficulties.
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Great put-downs...
Man: "Haven't I seen you someplace before?
Woman: "Yeah, that's why I don't go there anymore."
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