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Hold on Tight, the Credit Crisis about to get Worse

Posted on July 10, 2008 by Chelsea Wieber
Topics: Economic Development
Countries: United States

Maybe we should pay attention to Ted Forstmann's warnings about the credit crisis.

Twenty years ago, Forstmann warned us of the rapid end to the junk bond frenzy. Now he is even more worried about the economy. "We are in a credit crisis the likes of which I've never seen in my lifetime," said Forstmann in an interview with Wall Street Journal columnist Brian M. Carney.

As Carney reports:

Forstmann is most concerned with a different, more subtle effect of the oversupply of money. When it becomes too plentiful, bankers and other financial intermediaries end up taking on more and more risk for less return.

Forstmann was right before, maybe his warning will ring true again.

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