>CREDIT CRISIS & CREDIT GROWTH (WORLD)

YES, THERE IS A LIGHT AT THE END OF THIS TUNNEL

TOPICS FOR DISCUSSIONS

■ Credit crisis is very serious. Fed can keep Fed fund rates at zero percent and pursue even more expansionary monetary policies. Also,fiscal measures can be expanded further. However, in the current conditions such policy measure may actually aggravate and prolong the problem.

■ Non-financial credit growth has declined from an annual rate of 16% in late 2006 to currently between 1% and 2%. Also,deleveraging is occuring among financial intermediaries. This is extremely negative for an economy addicted to credit growth.

■ Regardless of policies followed by the U.S. Government and its Agencies the consumer is in recession, and the the recession will deepen. U.S. trade and current account deficits will shrink further and dimnish international liquidity. The shrinkage of global liquidity is bad for all asset prices.

■ We had an unprecendented global economic boom between 2002 and 2007. A colossal global economic bust has followed. In 2008, almost all asset prices collapsed.

To see presentation: CREDIT CRISIS & CREDIT GROWTH