Que: Does the sub-prime mortgage meltdown underway have the potential of bringing down the U.S. economy? (Alan Marshall, Plymouth, Mich.)

MANAGEMENT GURU

Ans: Meltdown is a good word for the unfolding sub-prime mortgage mess, but the answer to your question is still “No.” This is not the savings and loan disaster of 1989, which helped send the U.S. economy into a recession. Today’s economy is so much more broad based and global, and its financial markets so much more liquid, that it can handle this relatively small problem without serious long-term damage. Of course the problem doesn’t feel small to the people living it. Thousands of families are being forced to move out and unload their properties. And in the companies that made the sub-prime loans, employees are facing layoff s in a weakened industry. Even with those disheartening stories, it’s important to recognise that sub-prime mortgage business is just a small percentage of a $15 trillion economy. Indeed, you can already see the economy’s overall resiliency and liquidity in the activities of several investment companies, such as Goldman Sachs, that are buying up portfolios of sub-prime loans at distressed prices.

We’re not saying the sub-prime crisis should be pooh-poohed. But even with its spillover effects it won’t kill the economy. Think big blip, not blowout.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

For More IIPM Article, Visit Below....
Management Guru 's Speak on IIPM
IIPM going global
IIPM Management Guru India, Planman Consulting India
Management Guru 's Message
IIPM : EDITORIAL & RESEARCH
The maverick management guru
IIPM Alliances
IIPM Academics : Curriculum
On "IIPM - Arindam Chaudhuri - Planman"