Crisis 'Going to Last a Lot Longer'

The ills of the banking sector are spreading to industries previously thought resistant
By Jim O'Neill,  Newser User
Posted Sep 18, 2008 7:19 AM CDT
The exterior of the New York Stock Exchange is seen on Monday, Sept. 15, 2008 in New York.    (AP Photo/Jin Lee)
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(Newser) – 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.