Subprime problem may be halfway resolved

by Richard Kilner

Story link: Subprime problem may be halfway resolved

The worldwide subprime difficulties will cure itself, according to an optimistic prediction by Jamie Dimon, the chairman and chief executive of JP Morgan Chase.

Dimon made the remarks whilst addressing the World Economic Forum held at Davos.

During his speech he lauded the intervention of the central banks, and stated his belief that the subprime mortgage problem was borne of the housing bubble that burst.

Dimon also said that not only would the subprime problem eventually cure itself, but that it was already half done.

His positive outlook is in stark contrast to many other commentators, who fear recession in the US and the possibility of recession in the UK within the next two years.

William Rhodes, Citibank’s chairman, has said that he believes that the financial situation could well worsen before it starts to improve.

Of a similar view is John Thain, Merrill Lynch chief executive, who said that it would take some time for banking systems to revert to a normal situation.

It has been said by Roger Bottle, Deloitte advisor, that the UK’s economy is in the worst shape since its last recession.

Bottle has predicted a fall in house prices of 5% in 2008 and 8% in 2009 and that unemployment would rise to one million.

However, Bottle also said that policymakers would be able to influence the situation.