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Crisis signals a recession and bear market

The crisis afflicting credit markets has been perceived to be the result of specific problems, such as the weakness of the US housing market or the opacity of credit derivatives. This focus makes the credit crisis appear amenable to solution and has encouraged stock market investors to remain complacent.

Some argue credit market problems are bullish on the grounds that, as in 1998, they will encourage the US Federal Reserve to ease and provide liquidity for another stock market surge.

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