The Federal Reserve\u2019s actions have staved off a capital-markets catastrophe for the moment, but the economy is by no means out of the woods, experts on the keynote panel at the Pension Real Estate Association\u2019s spring conference in Boston said Wednesday. \u201cI would say we are in a recession,\u201d said Nariman Behravesh, chief economist and executive vice president for Global Insight. \u201cHow deep is really the question.\u201d Behravesh characterized the recession as between mild and medium. Approximately $240 billion of $400 billion in losses tied to sub-prime loans have been reported, he noted. The economic stimulus package will prod the economy into modest growth in the second half of the year after a mild contraction in the first half. But the economy could experience another dip in early 2009 after the effects of the stimulus wear off. Emerging from the downturn might take until the end of next year, he predicted. The Federal Reserve was wise to step in to prevent the collapse of Bear, Stearns earlier this month. That and other actions have helped to ensure an orderly market, according to Wesley Edens, chairman & CEO of Fortress Investment Group L.L.C., the private equity and hedge fund manager. However, Edens cautioned, \u201cIt doesn\u2019t necessarily encourage people to lend.\u201d Lawrence Summers, the former Treasury Secretary and president of Harvard University from 2001 to 2006, pointed out that a government policy that prevented Bear, Stearns from failing similarly could not let Fannie Mae go down the drain. \u201cThe concern is not that we\u2019re going to run out of ammunition to loan financial institutions money,\u201d Summers said. \u201cThe history of government efforts to prop up speculative prices is not a happy one, to put it mildly.\u201d The panelists also addressed the mixed prospects for the global economy. Behavresh noted that U.S. consumer spending accounts for about 20 percent of the world economy, and slow economic growth in the U.S. could ripple around the world. An intriguing question for China is what happens after the Olympics. If China\u2019s government slams on the brakes to cool an overheated economy, that move could combine with the post-Olympic letdown to place a double whammy on the Chinese economy. That could also influence the world economy as well, Behavresh explained. Summers and Behavresh expressed skepticism about the potential for sovereign wealth funds to help patch holes in U.S. financial institutions. \u201cThe reality is, sovereign wealth funds are very conservative investors.\u201d Summers agreed: \u201cI wouldn\u2019t wait up for them to be heavy investors in recapitalizing U.S. financial institutions.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
The Federal Reserve\u2019s actions have staved off a capital-markets catastrophe for the moment, but the economy is by no means out of the woods, experts on the keynote panel at the Pension Real Estate Association\u2019s spring conference in Boston said Wednesday. \u201cI would say we are in a recession,\u201d said Nariman Behravesh, chief economist and…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1003780583","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n