Romania in a post-credit crunch world? A cautionary tale from Australia and America

We present data on debt accumulation in Australia and the United States, and tentative data on Romania, to pose the question of whether Romania might experience a credit crunch as a result of the US subprime financial crisis. We develop a model of a credit crunch in a pure credit economy with endogenous money creation, to show how changes in bank lending practices and borrower repayment behaviour can bring about an economic decline.