Home Blogs Interesting Quotes (4)

Interesting Quotes (4)

Economic growth, Financial Events, Leverage

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