Prominent Los Angeles Investment Banker: Economy Facing ‘Colossal Problem’
September 22nd, 2007Via: Press Democrat:
The U.S. economy might be in more trouble than some people think, a prominent Los Angeles investment banker said Thursday during a visit to Sonoma State University.
Americans need to wake up to economic reality, said Ed Wedbush, chief executive of Wedbush Morgan Securities, one of the largest investment banking firms based on the West Coast.
“We could have a real colossal problem on our hands,” he said.
Wedbush pinned the recent jolts to global stock markets on fundamental problems with the nation’s economy. The U.S. markets are being bogged down by issues ranging from the souring credit market, the growing federal budget deficit and the large U.S. trade deficit.
Those three issues have shaken foreign investors’ perceptions of the once vaunted U.S. financial markets, he said.
He pointed out that the two largest holders of U.S debt — the Chinese and Japanese governments — have publicly announced a desire to reduce their positions in U.S. debt such as Treasury notes.
“The investment activity in the United States is going down,” he said. “This is something that could snowball.”
Research Credit: AC
Well, Richard Gibbs, chief economist at Macquarie bank, all’s well in the US!
http://www.news.com.au/heraldsun/story/0,21985,22459557-664,00.html
‘Gibbs says for the sub-prime to really smack Australian growth would require another wave of significant upheaval in US capital markets.
That’s because the Australian-US economic links are through the financial system and credit markets.
“If there was major ongoing disruption there, then that would spill over,” he says. But Gibbs feels this has probably been averted due to the Fed rate cut this week and promise of more if needed.’
So there. No ongoing disruptions in the US are likely! He would know – he’s a chief at a big bank and all…
Even chiefs at big banks can be wrong about economic matters once in a while.
Yeah, I know – I was being a bit sarcastic! His comment would be more a case of painting a nice, confidence-inspiring picture for everyone who wants to believe while he makes his time, I’d say.