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March 10, 2008

Another vote for stagflation

This one is from billionaire investor Wilber Ross, who also said he sees bank failures ahead, and a longer, not a shorter, recession.
“I think at best we’re in for stagflation,” Ross said, referring to the combination of higher inflation and weak economic growth. “I think the consumer has been tapped out for quite a while and is frightened by the poverty effect of seeing the house go down.”

Ross said the bond market and its ratings agencies needs to take a lot of blame, as he called for “real” AAA bonds rather than “fake” ones.

Meanwhile, Citigroup expects to see $9 billion in new writedowns at investment banks this quarter.

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