September 29, 2008

U.S. bailout, if it ever happens, would bring second wave of loan defaults, economist warns

The White House’s 700-billion-dollar bailout package was defeated 228-205 today by the House of Representatives. While the vote has already sent a shiver through Wall Street, the plan never promised a long-term solution anyway, says Reed Construction Data – Canada’s chief economist Alex Carrick.

Instead, Carrick says the U.S. economy faces a second wave of problems as the slowdown in the U.S. continues.

“The bailout package includes neither stimulus for future economic growth nor relief for consumers facing job losses and future difficulties in meeting mortgage payments, credit card debt, student loan obligations and so on,” writes Carrick. “This lack of stimulus and relief will bring a “second wave” of problems that the financial sector will have to deal with as the slowdown/recession continues.

Read Mr. Carrick’s complete analysis at It slows the bleeding, but does it revitalize the patient?

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