What does the coming year hold for the economy? BloggingStocks' Peter Cohan considers five issues that will factor heavily in 2008.
2008 is an election year in the U.S., which means that nothing significant is likely to change in terms of government policy. The one wild card in that assessment is whether the Bush administration will go to war in Iran – or take some other radical policy move -- since it knows it has very little time left.
Assuming nothing significant changes, the biggest economic story of 2008 is likely to be the repercussions from the deepened collapse of the housing market and all the credit markets that plunge in its wake. There are no firewalls in place to keep the drop in CDO, MBS, and SIV values from spreading to the entire global financial system.
The question is whether the U.S. policymakers will be able to do anything effective to stop the damage.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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