Posted on 08/27/2007 6:48:01 AM PDT by Hydroshock
WASHINGTON (AFP) - Former US Treasury secretary Larry Summers said Sunday it was too early to declare the financial markets crisis over and said chances had risen sharply of an economic downturn in the United States.
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Despite interventions by the US Federal Reserve last week which appeared to reverse heavy selling pressure over the collapsing US housing debt market, Summers said the risk of recession was its highest since the immediate aftermath of the September 11, 2001 attacks.
"We certainly saw some repair and some return to normality this week, but I think it would be far premature to judge this crisis over for at least two reasons," Summers told ABC television.
"First, we can't yet know that there aren't more shoes to drop in the financial area," he said, referring to the massive loss of confidence in securitized housing loans as US real estate prices sag.
"Second, we haven't yet had the time to observe what all this is going to mean for the real economy and for the actual process of job creation in our economy.
"I do not think we yet have ... a basis of making a prediction that there will be a recession, but I would say that the risks of recession are now greater than they've been any time since the period in the aftermath of 9/11."
Summers, who headed the US Treasury from 1999 to 2001 and then was president of Harvard University until a year ago, criticized the administration for not using government-backed mortgage lenders to help homeowners facing default on their loans.
He said policy should not be targeted at protecting investors or corporate lenders in the risky "subprime" sector, which targets borrowers with patchy credit records.
"You know, the substantial majority of the firms that were in the subprime mortgage business have already gone out of business. Many of the firms that remain have seen their stock prices fall by half or more," said Summers, now with the New York investment bank DE Shaw & Co.
"But the focus shouldn't be on those firms. The focus should be on the homeowner. The focus should be on the guy who bought a mortgage," he said.
What a wild ride at the end of summer.
Sweet. I haven’t sold short or bought munis, corporate bonds, or CMOs in years. I havent seen a decently priced fixed income security in years.
Secretary of the Treasury for the last year and a half of the Clinton administration, and served as the 27th President of Harvard University from 2001 to 2006.
In three instances during his time as Harvard president, Summers made remarks that touched on political “hot-button” controversies. Environmentalists, affirmative action advocates, and many women and those concerned with women’s issues took offense and brought increasing pressure on Harvard, contributing to his resignation.
Summers left his position as President of Harvard on June 30, 2006, and was replaced by former University President Derek Bok as acting Interim President the next day.
I think a cautious course is what is needed for the next few months to say the least, this rollercoaster is nto stopping anytime soon.
Clinton appointee or not, when someone with his resume speaks he is listened to to some degree or another by the markets. This does not bode well.
"someone" = Clinton appointee = NO ONE
Since January 2001, the Commie ‘RATS and their little toadies in the MSM have been telling everyone that the economy is in the toilet. After a while, that constant bashing and trashing will eventually cause the people to start to believe it and in the end, will eventually make it so. This is no surprise. It’s what the DemocRATS have been working hard to achieve for the last seven years.
“It’s all Bush’s fault”. Yep.
I guess misery DOES love company, eh??
Lawrence of Absurdia
Harvard President Lawrence Summers says his comments about women’s innate talents (or lack thereof) were mere intellectual provocation. Women the world over disagreed. Now Summers finds himself on the defensive, while a divided university debates jus
http://www.bostonmagazine.com/articles/lawrence_of_absurdia_1/
clinton hack enough said. The housing market has been improving over the last month.
Pray for W and Our Troops
Clinton appointee calls for more government bailout of persons who get in over their heads. No surprise there.
"You know, the substantial majority of the firms that were in the subprime mortgage business have already gone out of business. Many of the firms that remain have seen their stock prices fall by half or more," said Summers, now with the New York investment bank DE Shaw & Co.
Is he saying the worst is past? Why should the government do anything at all about this? It seems that he is supporting the view that the market self-corrected.
No mention of said expert being a Demorat appointee in the article? What a surprise...
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