“Recession” is the word that’s bothering every big or small, developed or developing country in the world. In the past year we have seen the collapse of many investment banks and mortgage houses in Australia. Australian’s thought that their experience would be relatively mild. It was proved wrong that their financial system is immune to this crisis. Australia’s physical distance from the rest of the world has also not given any respite to the falling share market there. The Australian share market has fallen more than 20 per cent since November and official interest rates have risen four times since then.

The most recent retail trade statistics has also shown the biggest fall in sales in Australia in past six years. This all has brought consumer confidence at an all time low. This is not the end as the credit crisis is still not over; some economists think that the worst is still to come.

The big reason for all this is that too many loans was given too easily to excessive number of people who couldn’t afford to repay these debts. The current state of the credit crisis in Australia has arisen because large amount of money was lent to people who were without jobs, no other source of income and no assets.

This credit crisis could have been avoided by American banks if they had stricter lending practices. Australia hasn’t been immune from the current credit crisis. A large amount of money has been wiped off the share market and numerous home owners are burdened with foreclosing on their mortgage. All of this resulted in rapid fall of system credit growth.

The big question now is when and how will this credit crisis be over? It’s a matter of wait and watch for now.