Republican economics at work. Business received everything they wanted including superstar salaries to schmucks while slashing benefits for employees. How’d it all work out?
Credit losses from the financial crisis may exceed even dire estimates of $1.4 trillion, or more than 10 percent of U.S. economic output, according to the chief strategist of research firm CreditSights.
Financial and non-financial loss estimates by the International Monetary Fund and World Bank may be too conservative as the economy weakens and companies and consumers focus on repaying debt, Louise Purtle said on Wednesday.
“What does life after leverage look like?” asked Purtle, during a credit conference in New York. “We’re not prepared for it. The great danger looking into 2009 is being too optimistic.”
Most indicators suggest no easy fix, she said. U.S. existing home sales indicate there are about 1 million extra homes that can’t be sold. Defaults and delinquencies for home loans continue to climb, adding to the 6.9 million foreclosures over the past three years.
U.S. consumer confidence is at its worst levels, exceeding pessimism seen during the 1970s, she said.