New America Foundation Tom Gallagher, CFA ISI Group September 23, 2008 Confronting Economic Meltdown.

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Presentation transcript:

New America Foundation Tom Gallagher, CFA ISI Group September 23, 2008 Confronting Economic Meltdown

ISI Group Source: Federal Reserve Board. Source: ISI. Reluctance by banks to lend is a major headwind for the economy.

ISI Group Source: Federal Reserve Board. Reluctance by banks to lend is part of a broader deleveraging of the US economy.

ISI Group Public Sector Recapitalizations Of Financial Sector, Developed Countries Source: Reinhart and Rogoff AEA. Financial crises usually require nontraditional policy responses.

ISI Group 3-month Treasury bills fell close to zero for 3 days last week…

ISI Group … which havent been seen since the 1930s.

ISI Group Financial rescues may be necessary but have costs – higher Treasury rates and a weaker dollar.