Credit Shock May Be Too Large For Economy To Absorb
Last week’s response, from the Federal Reserve and the White House, through the Congress, may not be enough to counter the current recessionary fever gripping the United States economy. Even with mortgage interest rates approaching the 5.25 percent all-time lows of ‘02-’04, home sales continue to falter.
The last three weeks have resulted in a panicky stock market as demonstrated plainly on stock market charts. As the markets declined, everyone seems to have finally waken to danger, and the hazard itself continues to grow. Once confined to mortgages and the very strange “structured” IOUs, an economic pullback threatens defaults in a wide range of credits. The typical victims of an economic slowdown is credit, the result of a badly impaired system. If the credit market isn’t in complete and unmanageable shambles, then it’s close.
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