Length of credit crunch 'astounding'

The credit crisis is set to continue for many more months, it has been claimed.

According to analysts speaking at the Reuters Investment Outlook Summit, the continuing uncertainty surrounding US house prices - along with the rise in mortgage defaults - could tip the world's largest economy into recession.

This is due to cash-strapped banks retaining ever-tighter credit criteria, due to their fears of exposing themselves to further bad debts.

Greg Peters, an executive at Morgan Stanley, termed the fact that the credit crunch was still ongoing "astounding" - given the dramatic loosening of interest rates from the Federal Reserve.

He added: "Who would have considered that the Fed [would] aggressively cut rates, and in addition to that, create all these special facilities for the investment and securities industry, and yet we're still in the state that we're in?"

"We have fundamental uncertainty about what is going to happen with house prices," head of the National Bureau of Economic Research Martin Feldstein also told delegates.