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SINGAPORE : John Thain, the newly-installed chief executive of US investment bank Merrill Lynch, has lent his voice to the view that the worst of the US credit crunch is over.
Several prominent people, including well-known investor Warren Buffet, have said over the last few days that the credit crisis in the US has eased.
But like Warren Buffet, Mr Thain believes that the US economy as a whole continues to be in a poor shape.
Speaking to Channel NewsAsia during a visit to Singapore, Mr Thain said: "Well, I think that the the vast majority of the credit-related problems, which of course began with sub-prime and then moved to other classes, are in fact over.
"I think if you look at the prices in the leveraged loan markets, if you look a the credit spreads - things are getting better. But I'm still concerned about the US economy overall.
"I'm concerned that the impact of falling home prices, rising energy prices, rising food prices, rising unemployment - all (of these) will have a negative impact on the consumer, and that will be a drag on the US economy going forward."
Two weeks ago, Merrill reported that it lost US$2 billion in the first quarter. This was due to write-downs from collateralised debt obligations.
However, Merrill Lynch said it is banking on its global business to lift its fortunes. The investment bank derives 60 percent of its revenue from banking and trading activities outside the US. - CNA/ms
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