Tech & Biz

US Heading Into Recession

by phrolen | August 27, 2007 at 07:18 am

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On the heels of the U.S. subprime lending crisis at least one former U.S. government official believes that the Unites States may soon be heading into a recession. Former U.S. Treasury Secretary Larry Summers, making comments to European journalists, said "I would say the risks of recession are now greater than they've been any time since the period in the aftermath of 9/11." The remarks sent shudders through financial markets this morning with the Dow Jones Industrial Average tumbling more than 50 points shortly after opening. The Dow, as well as other financial markets has been in slide since the Sub-Prime debacle came to fruition several weeks ago, prompting government monetary entities to pump cash to stabilize an ailing western Banking system.

US could be heading for recession

Last Updated: 9:42am BST 27/08/2007

Ex-Treasury Secretary Summers warns of risks 'greater than any since aftermath of 9/11', reports Ambrose Evans-Pritchard

# Subprime crisis in full

# Ambrose Evans-Pritchard: Prepare for the crunch

Former US Treasury Secretary Larry Summers

Larry Summers: 'It would be far too premature to judge this crisis over'

Former US Treasury Secretary Larry Summers warned that the United States may be heading into recession as the biggest victim to date of the sub-prime mortgage debacle was humiliatingly sold for a token sum in Germany.

Traders are braced for another week of turmoil after the near breakdown of America's $2,200bn (£1,100bn) market for commercial paper.

"It would be far too premature to judge this crisis over," Mr Summers said. "I would say the risks of recession are now greater than they've been any time since the period in the aftermath of 9/11."

In Germany, it emerged that the state-bank SachsenLB may have accumulated $80bn of exposure to risky assets through a set of Irish funds kept off balance sheet.