Summary
Businesses are being confronted with a cadre of challenges at the moment. The US economy is flirting with recession, financial markets are in turmoil as investment vehicles are failing and write-downs are approaching a staggering point. Some estimates have foreseen as much as $1 trillion in losses due to the crumbling US housing and mortgage markets. The mortgage crisis is spawning an increasing number of doldrums that are hanging their hats in the US marketplace. The larger problem is that the world is no longer made up of national economies. This past January, the Fed began an aggressive campaign to stimulate the US economy by slashing interest rates and trying to pump as much liquidity as possible into the financial system. That type of monetary policy typically has a lag time from three to six quarters, meaning the start of a turnaround in US markets would begin sometime around January 2009. Around the globe, risk is increasing.
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Extract
Containing the Outbreak
Businesses are being confronted with a cadre of challenges at the moment. The U.S. economy is flirting with recession, financial markets are in turmoil as investment vehicles are failing and write-downs are approaching a staggering point. Some estimates have foreseen as much as $1 trillion in losses due to the crumbling U.S. housing and mortgage markets. The massive hits to IndyMac Bank, Wachovia, Citigroup, Freddie Mac and Fannie Mae have done nothing to prove otherwise. Linked to this maelstrom of poor lending is the bleeding out of consumer confidence, which has hit epic lows, reining in spending and forcing the discussion of another possible economic stimulus package.
In a nutshell: risks were taken and they failed to pay off. Citigroup alone is looking ...See the full content of this document
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