"Successful investing is going against the momentum and against the things that seem most logical in the present space."

Friday, August 3, 2007

Tighter credit could slow U.S. GDP growth

By Emily Kaiser
WASHINGTON (Reuters) - From subprime borrowers to lumberyards to corporate giants, tighter lending standards are starting to pinch consumer and business spending, threatening to slow already tepid U.S. economic growth.

While Treasury Secretary Henry Paulson insists credit problems stemming from a housing downturn are "largely contained," banks are increasingly leery of backing all sorts of risky loans, not just subprime mortgages for borrowers with shaky credit.

"All the hoopla about subprime has created a sense among creditors and lenders that maybe they should rethink their easy terms," said Milton Ezrati, senior economist at Lord Abbett & Co. "It means that we have what is equivalent to a Fed (interest rate) tightening going on."

No comments: