Eliot Spitzer went to Congress recently to speak about his state's and specifically Wall Street's impact on the national and global economy. That small street and the industry that surrounds it controls the bond market and the housing slump and mortgage crisis has the potential to create what Spitzer calls a "Financial Tsunami." How bad is it you ask?
Bad, real bad:
In testimony to the US Congress, Spitzer urged lawmakers and regulators to urgently address the bond and credit problems roiling the financial industry which have forced some big firms to writeoff billions of dollars in troubled securities.
"If we do not take effective action, this could be a financial tsunami that causes substantial damage throughout our economy," Spitzer said, according to a transcript.
He said the financial difficulties of bond insurance companies could have a widespread effect because they insure a broad range of bonds and securities such as municipal bonds, college loans and even relate to museum budgets.
Spitzer cautioned that individual investors who own bond portfolios could also sustain losses if the industry faces further losses and writedowns.
The impact from this will affect more than museums and bond portfolios. This will shock everyone and the outcome will not be pretty.
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