This is an interesting analysis piece running in the Financial Times today.  Larry Kantor is head of research at Barclays Capital, a global investment firm.

He starts his article with the following sentence, “the events of the past couple of weeks have greatly diminished the risk of a financial disaster.”

Below are additional key quotes from Mr. Kantor:

This means any subsequent bouts of extreme illiquidity and general withdrawal from counterparty risk will be dealt with and should prove temporary.

So, an all-clear whistle is unlikely to sound in credit markets over the next few months.  Nevertheless, as far as the global economy is concerned, the expansion has remained largely on track throughout the credit turmoil.

Some help will be provided but do not expect a silver bullet that will quickly stabilise the housing market and limit losses to mortgage lenders. Ultimately, house prices will have to find a clearing level and losses will have to be realised.

The silver lining in declining house prices is that activity – sales and starts – is likely to find a bottom well before the end of the year.