This year has been a tough one economically. We’ve had the foreclosure crisis, and now the credit crunch. People are bracing for the worst. Now leading academics are saying that the credit crunch may not be over yet.
The deepening toll from the global financial crisis could trigger the failure of a large US bank within months, a respected former chief economist of the International Monetary Fund claimed today, fuelling another battering for banking shares.
Professor Kenneth Rogoff, a leading academic economist, said there was yet worse news to come from the worldwide credit crunch and financial turmoil, particularly in the United States, and that a high-profile casualty among American banks was highly likely.
“The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come,” Prof Rogoff said at a conference in Singapore.
In an ominous warning, he added: “We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one — one of the big investment banks or big banks,” he said.
Personally I’m not going to start panicking about anything quite yet – I think the markets are still in a correction, while things may get worse, the sky isn’t falling and we aren’t going to be bartering chickens for corn anytime soon. The markets are not going to collapse!
What do you think about all of the problems our economy has been having this year, and what are you doing because of it?
I can see it happening. The banks have gotten away with dishing out credit without really looking at whether people can truly afford it. People use credit like candy. In my neighborhood, we have houses for sale going on the second year now, and this is in a district labeled as a top place to live in (Money mag). The savings rate for the average family is very low with people living paycheck to paycheck. Banks no longer have a flush amount of cash to rely on from the American family.
The prudent (those who have an emergency fund) will find these times less stressful than those who rely totally on credit cards.
@Mo Money – i agree.
I agree that there is still room for further problems. Credit has become too easy. My mom was telling about how her and my dad couldn’t even get a credit card until after they had established credit by having an auto loan (co-signed, of course).
How different things are now! The credit card is now the establisher of credit, and anyone can get one. Having our entire economy based on keeping Americans in debt can go on forever. Eventually it will be too much, and individuals will finally fold.
The credit crunch is getting worse almost daily. House repossessions are up on last month and will soon be higher than those of the 1990’s. It’s scary!
But there is a way to make some extra cash which would really help. Set up a home-based internet business or do a part-time job online. If you have any spare time it’s worth considering.