Is Recession the Next Phase of the Crisis?
An editorial published by Money and Markets takes a look at the building evidence of a recession. Here is an excerpt with several interesting points:
- The housing crisis is gutting the home equity of millions of households, abruptly ending their ability to use it as a personal ATM machine.
- Big retail chains are expecting a holiday shopping season that one leading analyst calls “a train wreck under the Christmas tree.”
- Even technology companies — thought to be a place for investors to hide from the fall-out of the housing crisis — are getting smacked, as evidenced by the rout in their shares last week.
- And most important …
- The credit crunch has spread to the nation’s banks with the force of an F5 tornado. It’s tearing into the banks’ portfolios. And it’s triggering their most intense tightening of lending standards in nearly two decades.
- Meanwhile, word leaked out on Friday that three major banks — Citigroup, JPMorgan Chase and Bank of America — may be near a deal to create a $75 billion superfund to help stabilize credit markets.
- But it won’t end the crisis. Even Treasury Secretary Henry Paulson said on Thursday that the fund would not rescue troubled institutions; it would only lead to a longer and more orderly demise.
With the rising evidence, it’s no wonder that analysts fear a recession. Companies have been trying to restore consumer confidence with funding proposals left and right. But will it only delay the inevitable? At this point, we can only wait and see.
A recession will likely result in increased rates for loans such as a home equity line of credit.
November 16, 2007 | Filed Under Home Equity Line of Credit
Comments
Leave a Reply
You must be logged in to post a comment.