Serious Fed Bank action is urgently required

IT is easy to forget that within the first decade of this Millennium, the US has been hit with two major crises that cast long shadows and raised serious doubts about that economy’s ability to survive.

The stock market bubble of 2001, followed quickly by the 9/11 disaster have come and gone however, and some already take the view that the sub prime storm has already been weathered.

That is probably over- optimistic and reports yesterday suggesting that up to 20% of jobs in the investment banking world are to be shed in the wake of the sub prime crisis is tangible evidence that the crisis, which until now has been seen mainly is the volatility in the stock markets, is starting to affect jobs and banks globally. Speculation is also growing that about 20% of the sub prime lending conducted through 2005 and 2006 will result in huge foreclosures on US homes.