The World Bank s traditional instruments have been (and still are) low interest loans, interest free credits, and grants.

Interest

For example, formerly communist countries earned emission credits at zero cost on the heavy industries that they had to shut down and reaped windfall profits by selling them.

Losses are spreading from sub prime to near prime and prime mortgages, commercial mortgages, and unsecured consumer credit (credit cards, auto loans, student loans).

, including interest and costs, where appropriate.

Panic ensued and credit stopped circulating.

Heavily indebted eurozone members can apply to borrow from them at less than the commercial rate, conditional on their committing to ever more drastic fiscal austerity.

Principal and interest on outstanding debt have been left intact.

Credit tightened sharply.

The interest rates for such loans are high.

It's also good with credit.

Its credits and swaps have never been activated.

Banks magnify the boom by making credit too easily available, and they exacerbate the bust by withdrawing it too abruptly.

The difference was financed by transferring stocks and bonds worth 700 billion.

The interest and dividends on those securities will be paid by sending more pieces of paper .

Furthermore, though countries accrue interest on their holdings of SDRs, they have to pay interest on the allocations they receive.

Delinquencies, defaults, and foreclosures are now spreading from sub prime to near prime and prime mortgages.

The anomaly of rising consumption driven only by tax rebates and social welfare payments ended in March, when consumer spending declined in response to lower employment and falling labor incomes.

As a result, they all could borrow at practically the same interest rate as Germany.

In contrast, salaries, self employment income, dividends, and interest all fell.

There was a housing bubble, and loans were made on the basis of inflated prices.

As their capital declines, so, too, do their future loans.

Short term bank lending from abroad is unstable and therefore dangerous

Public sector firms have incentives to lobby for subsidies, protection and cheap credit.

Their consequent reluctance to lend constrains investment.

Pinjaman Tiongkok kepada Brasil hampir sebesar 1 PDB nya, sementara pinjaman yang diterima Meksiko relatif kecil (lihat grafik).

SOEs will lose their low interest loans, subsidized land, monopoly protection, and privileged housing.

To be sure, some domestic banks continue to provide credit.

But when the entire international system becomes entwined with an excessive amount of short term inter bank lending, the world economy becomes subject to financial panic.

Moreover, mortgages are usually securitized.

Short term inter bank loans are seemingly less risky than long term lending.

The risk premium is falling, pushing stock prices higher and lowering yields on long term bonds.

Banks and other lenders are extending credit to lower quality borrowers, to borrowers with large quantities of existing debt, and as loans with fewer conditions on borrowers (so called covenant lite loans ).

Households are running scared, so they cut expenditures as well, and businesses are being dissuaded from borrowing to finance capital expenditures.

Politicians gained influence and popular support by directing state owned banks to make loans to favored constituencies.

We have met all of the conditions asked by the international community to start the debt relief process, but creditor countries have not yet agreed on the financing.

Borrowers may be forced to save more by paying higher mortgage rates.

German banks grant mortgages only to a maximum of 60 of the value of a house, instead of the 100 mortgages that were frequently seen in the US and United Kingdom.

In your opinion, to what extent is the demand for credit by business owners being met?

Why, then, were the bank loans so short term and therefore so prone to panic?

Interest or other financial penalties or incentives along the lines under consideration in Europe.

Most of this is accumulated interest on loans borrowed by rapacious dictators of the past.

Interest or other financial penalties or incentives along the lines under consideration in Europe.

These inferior substitutes often imply exorbitant costs for borrowers and financing that is usually too short term for productive investment activity.

Growth requires financial institutions that lend to domestic firms.