Credit Crunch Risk Increases
The risk of an old fashioned destructive credit crunch seems to be growing with the disclosure by AIG insurance company, the worlds largest lender, that late mortgage payments are spreading from the subprime loan market to higher rated loan categories.
Consumers in the US are increasingly likely to experience a sharp spike in interest rates that may persist for a very long time. The artificially low rates of the Greenspan Fed era have lead to such credit market distortions that it may takes years for the credit markets to readjust.
