But in the current turmoil, the banking sector (which started out with very healthy capital balances) seems to be incurring losses that, while large, appear to be far lower than those in previous crises. The losses are spread across a range of poorly understood entities and investors, such as hedge and pension funds, around the globe. It is far from inevitable that this bad financial news, the equivalent to the loss in assets seen in a typical bearish day on Wall Street, will translate into a sustained reduction in economic activity.
I can tell you with absolute certainty that it will be terrible, and that the longer we try to put off the crunch, the worse it will be
As far as 'terrible'... I mean economic catastrophe, something on the order of the Great Depression.
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