Interesting Quotes (4)

Back in August, as the credit crisis began, I tried to capture the heart of the issues it raised in a few quotes. Many people now believe that it is coming to an end. I am not so sure, and fear it may, in fact, be simply moving from Wall Street to Main Street. If it does, the following quotes may provide a guide as to where we are now, what may happen next, and why we are in this mess:

‘As real estate prices plunge, so does the ability of homeowners to borrow against the value of their homes, crimping a major artery of spending. As banks grow tighter with their dollars in a period of uncertainty, families are running up against credit limits, forcing many to live within their incomes. And as companies lay off employees and cut working hours, paychecks are effectively shrinking.’ New York Times

‘Government efforts should focus on helping the housing market reach equilibrium without overshooting. This can be done only through widespread restructuring of unaffordable mortgages into affordable ones. However, it is questionable whether government programmes can, or should, help borrowers who view home ownership as a leveraged investment. Solutions should focus on those with a long-term commitment to remaining in their homes and paying their mortgages if they had an affordable payment. Sheila Bair, Chairman, US Federal Deposit Insurance Corporation

`Investment banks leapt into commercial banking without the deposit base, while commercial banks went into investment banking without knowing risk management, and this is where we end up.’ Brad Hintz, Sanford C. Bernstein & Co

‘Wall Street’s money-making machine is broken, and efforts to repair it after the biggest losses in history are likely to undermine profits for years to come’. Bloomberg

‘A friend, who is a teacher, lamented to me recently: “For years we have been told that bankers were paid so much because you were cleverer than the rest of us. Now it turns out you were not clever at all and we are all suffering for your stupidity.”‘Abigail Hofman, former investment banker

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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One Response to Interesting Quotes (4)

  1. Biofuelsimon 1 May, 2008 at 11:19 am #

    Looks to me like we might be thinking about the 20s depression. You know: credit gets tight, people stop buying goods services, companies lay off staff to try to remain competitive, because there are fewer poeple earning then they can buy less/deposit less in banks and so we go round the loop again.

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