According to treasury secretary Timothy Geithner, the slow climb out of the current recession is still largely due to mistakes make in real estate and lending over four years ago. “You had this huge growth in leverage in the financial system and huge overinvestment in real estate in parts of the country…But more relevant for us now, they make the recovery much harder,” he said at a U.S. Hispanic Chamber of Commerce Conference in Dallas, TX recently. He went on to explain that exports and private investment are “really quite strong,” but that the issues with lending, leverage and housing back in 2006 are making today’s recovery “slower, longer [and] more uneven.”
There are indications that some angles of investing, including business investing, may end up being less severe than was originally projected by economists. However, experts are still strongly divided on the commercial real estate market, with about half predicting that things will start to look up while the other half steadily maintains that the worst is yet to come. The housing market also appears to be lagging simply due to oversupply, though the recent presidential housing report is optimistic and states that while prices are stabilizing at low levels, they are stabilizing.
Do you agree with Geithner that today’s economic stagnation at various levels and facets of the economy can be blamed on events that happened four years ago? Is there perhaps a little more to it at this point?
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