‘Worse than the Depression,’ ex-Goldman chairman warns
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The boilerplate line about the U.S. economy’s prospects in 2009 is that we’ll experience the worst downturn since the Great Depression.
No, says a former Goldman Sachs Group chairman -- it could be even worse than that.
From Reuters:
The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs Chairman John Whitehead said at the Reuters Global Finance Summit on Wednesday. Whitehead, 86, said the prospect of worsening consumer credit woes combined with an overtaxed federal government make him fear that the current slump is far from over. ‘I think it would be worse than the Depression,’ Whitehead said. ‘We’re talking about reducing the credit of the United States of America, which is the backbone of the economic system.’ Whitehead warned the country’s financial strength is at risk due to the sweeping demand for tax relief and a long list of major government spending plans. ‘I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America,’ he said. Whitehead, who helped make Goldman a top-tier Wall Street firm and led its international expansion, left in 1984 to become a deputy secretary of state under Ronald Reagan.
The stock market is acting today like it might believe Whitehead. Major market indexes are down sharply, and are perilously close to falling through their October lows -- which many Wall Street pros had hoped would mark the bottom of this bear market.