How Will Credit Crunch Hit Home?

That's our question for the day.

In a story today, Thomas Heath quotes several of the heavyweights in local finance on the global credit crunch roiling markets around the world, turmoil that may affect everything from stock prices and mortgage rates to many of the largest merger deals now in the works around the region.

"This is the real deal," Eric F. Billings, chairman and founder of Friedman, Billings, Ramsey told Heath. "No question about it. This is a serious shakeout. You had a lack of discipline because of the huge excess of liquidity the past five years. That is working its way through the system right now."

William L. Walton, chairman of Allied Capital, which invests in small and mid-size businesses, said "the market is repricing risk. And given the complex structures that have been used to hold financial assets and manage credit risk, the market is trying to sort out who are the winners and who are the losers."

Frederic V. Malek, who was a senior adviser to Carlyle from 1989 to 1991 and then founded Thayer Capital, seemed relatively sanguine about the prospects. He said the effect on Washington would be less severe than on other financial centers.

"The Washington area has been generally resistant to large swings because of the stability of government employment and spending," Malek said. "This is likely to settle down in the coming weeks or months. And I suspect that this will have a lesser effect in Washington than in the rest of the country."

Is the credit bubble bursting? Will the deal flow stop? What's your outlook on the local economy? Tell us about your experiences and send us your thoughts.

By Dan Beyers  |  August 10, 2007; 6:35 AM ET
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Comments

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Besides the breathless media reports, the only thing a typical person will notice is that, for about a month, he will get 8 credit card solicitations in his mailbox a week, instead of the usual 9.

Posted by: gitarre | August 10, 2007 7:19 AM

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