Post by Paddy by Grace on Sept 1, 2008 16:41:50 GMT -7
www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/19/bcnken119.xml
Banking shares across the world were hit after a stark warning from the IMF's former chief economist Kenneth Rogoff that the worst of the credit crisis is yet to come.
Kenneth Rogoff, chief economist to the International Monetary Fund between 2001 and 2004, told an audience in Singapore that "the financial crisis is at the halfway point, perhaps."
Now an economics professor at Harvard University, Mr Rogoff said. "We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks."
He added that efforts by Asian sovereign wealth funds to bail out US banks were not the solution. "The financial system has become very bloated in size and needed to shrink," he said.
Mr Rogoff also touched on the spectre of global inflation, warning that the need to cut interest rates and stimulate the US economy is "going to lead to a lot of inflation in the next few years".
Mr Rogoff's comments came as fears that the global economic slowdown and persistent inflation has infected Asia increased, sending stock markets in Japan and Hong Kong tumbling.
Banking shares across the world were hit after a stark warning from the IMF's former chief economist Kenneth Rogoff that the worst of the credit crisis is yet to come.
Kenneth Rogoff, chief economist to the International Monetary Fund between 2001 and 2004, told an audience in Singapore that "the financial crisis is at the halfway point, perhaps."
Now an economics professor at Harvard University, Mr Rogoff said. "We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks."
He added that efforts by Asian sovereign wealth funds to bail out US banks were not the solution. "The financial system has become very bloated in size and needed to shrink," he said.
Mr Rogoff also touched on the spectre of global inflation, warning that the need to cut interest rates and stimulate the US economy is "going to lead to a lot of inflation in the next few years".
Mr Rogoff's comments came as fears that the global economic slowdown and persistent inflation has infected Asia increased, sending stock markets in Japan and Hong Kong tumbling.