Credit Crisis May Persist Til 2010

Economic indicators strongly suggest that the credit crisis will persist through at least mid-2009, reducing the prospects for global economic growth before 2010, according to Oxford Analytica.

In an analysis following the Federal Reserve’s decision to leave interest rates unchanged, OxAn says that as the first anniversary of the global credit crisis approaches on August 9 (when the US credit contagion spread abroad) there are few signs that the situation is improving.

Global growth will face severe headwinds as long as this phenomenon persists, particularly in the context of the US housing market correction and historically high energy prices.

OxAn sees two basic reasons why the credit crisis is likely to continue through much of 2009:

 

• Calls on capital. US and European banks have, to date, recognised only approximately 475 billion dollars in loan losses, and raised 350 billion in new capital. However, it is widely expected that banks will be forced to recognise more bad loans, which will create even more demand for capital. This is likely to depress asset prices further, prolonging the crisis.
• Housing bellwether. As Treasury Secretary Henry Paulson aptly noted, the crisis is unlikely to attenuate until the US housing market shows signs of stabilising. With US housing prices still falling rapidly, and with home foreclosures hitting new records, it is unreasonable to expect the housing market to stabilise before the second half of 2009.

Further details are available in OxAn’s Credit Crisis May Persist until 2010.

Comments

[jjason:]

Historically high oil prices can be reduced by lobbying Congress. Go To:

www.stopoilspeculation.../

And sign the petition.

Also complain to Congress. Tell Congress you are fed up with the job that the Commodity Futures Trading Commission is doing.

2008 Aug 08 09:40 AM

[tiger9844:]

I'm thinking the crisis might go through 2110. Housing should turn around in around 2100.

2008 Aug 09 01:45 PM