Crisis 'Going to Last a Lot Longer'

The “worst financial crisis since the Great Depression” is spiraling downward and we may not have hit bottom yet, reports the Wall Street Journal in a look at how the subprime contagion has spread beyond its banking hosts, infiltrating sectors previously thought to be immune. “I think it’s going to last a lot longer than perhaps we would have anticipated,” said Xerox CEO Anne Mulcahy yesterday.

Deleveraging across the economic spectrum—the dumping of debt by everyone from US households to global conglomerates—has brought economic growth to a standstill and tightened credit markets. And the process of paying off and writing down debt, so that capital reserves can be rebuilt, can be almost impossible when asset prices are depressed.
(More credit market chaos stories.)