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Expect U.S. economic woes to linger into 2009

Some economists predict a long recession, say problem stems from greed, dishonesty.

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The financial troubles in the United States are far from over. The economic downturn, probably already a recession, could last deep into 2009, with rising unemployment and continuing business failures.

That's the view of several economists.

"This is not like credit crunches of the past," notes Washington consulting economist Harald Malmgren, in an e-mail from Tokyo. "What we are going through is a gradual, painful credit contraction, as lenders try to gather new capital and reduce their [loans]."

Milton Ezrati is less pessimistic. "The worst is done," says Dr. Ezrati, a senior economist of Lord Abbett & Co., a mutual fund company in Jersey City, N.J. But he also expects subpar economic growth "well into 2009" as financial institutions continue to writeoff weakened assets and consumers restrain expenditures after "a debt binge for 20 years."

Henry Kaufman, a veteran Wall Street economist dubbed "Dr. Doom" in the 1960s, figures the mess in securitized assets, such as those loaded with sub-prime mortgages, is "60 to 65 percent over." But because banks and other financial institutions will extend less credit, the economy will "scoot along at close to recession levels" for the next couple of years, he says.

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