A mild recession? The forced sale of Bear Stearns Co., a top Wall Street investment bank, and persistent market turbulence are raising the odds that a 2008 recession could be worse than expected.
Analysts’ concerns: Noted economists have sounded alarms. Former Federal Reserve Chairman Alan Greenspan wrote: “the current financial crisis in the U.S. is likely to be judged as the most wrenching” since the end of World War II.
Tight credit: When banks stop lending to other institutions that, like Bear Stearns, depend on credit to conduct their day-to-day operations, the results can be catastrophic.