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Wall Street firms see recession
nearing
John Poirier
Reuters
Tuesday November 6, 2007
The economy might be edging toward a recession in the wake of
mortgage-related credit woes plaguing the financial markets, bankers
and analysts said on Monday.
"I think that the risk of a recession is greater than people
realize," James Dunne, chief executive of Sandler O'Neil
& Partners, said at the Reuters Finance Summit in New York.
With home prices dropping, more people about to lose their homes
due to unaffordable mortgages and sharply higher oil prices, the
economy could be on the brink of slowing down, they said.
"I think there is a serious risk to the economy," Howard
Lutnick, CEO of Cantor Fitzgerald, told the summit.
Charles Peabody, partner at New York-based research firm Portales
Partners LLC, said the Fed may have to take more aggressive action
and drop the benchmark fed funds rate in an effort to prevent
a Japanese-style economic stagnation, which eventually evolved
into a deflationary recession.
(Article continues below)
"We're moving into a recession, and over time -- the length
of which is difficult to predict -- there is going to be a lot
more credit problems," he said.
Preliminary data released by the U.S. government last week showed
that the gross domestic product grew by 3.9 percent in the third
quarter, compared with 3.8 percent in the previous quarter and
0.6 percent in the first three months of this year.
Full
article here.
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