Published: December 06, 2008 12:23 am      

Expert: Economic woes may have ‘silver lining’

By Rebecca Boysen

Herald Staff Writer

CLINTON — As fears continue to mount over a possible collapse of the American automobile industry, a failing economy and a global financial crisis, some experts are reporting that things may not be as bad as they seem.

Mark Griffin, the chief investment officer with Clifton Gunderson Financial Advisors, recently spoke to a group of community members gathered at the Clinton Country Club for an Economic Outlook presentation sponsored by the firm.

Griffin, a member of Clifton Gunderson’s Wealth Management Group, advises the Investment Board of Financial Advisors for the firm, which manages approximately $1 billion in assets.

Griffin explained to those in attendance that the current financial situation has been primarily caused by an overabundance of available credit.

“When credit is too cheap and too easy to get, all of us have a tendency to take out more than we need,” Griffin stated, noting that too many people took out credit they couldn’t afford to repay.

He noted that what followed was a massive de-leveraging by markets across the world, as lenders attempt to sell off their assets to reduce liabilities.

“You must sell assets into the marketplace to reduce exposure, and that creates more supply than demand,” Griffin reported. “It has resulted in the greatest de-leveraging the world has ever seen, and it will continue until we reach equilibrium.”

Griffin reported that the actions of the treasuries and the Federal Reserve, including the increasing of FDIC limits and direct injections of capital into the banking systems, saved the economy from “complete and absolute failure that was on the edge and about to drop off into a bottomless pit.”

Griffin reported that, although the government has not officially recognized it, “recession is absolutely here.”

He noted that although the term is “taboo,” periods of recession can actually have a “silver lining,” restoring balance and savings rates, and permitting future growth.

“(Recession) is a necessary component of a normal, healthy economy,” Griffin told the group.

Despite Griffin’s report that the national housing market has declined by 16 percent, with improvement still a few years away, he noted “it will find footing in the not-too-distant future.”

Griffin reported that, overall, he is optimistic about the future of the economic situation.

“The economic fundamentals don’t look good, but as for the capital market, the opportunist in me says I’m feeling better than I have in a long time,” Griffin stated in an interview with the Clinton Herald. “The economy will work itself out in the next few years, but as for the capital market, the investors, things are priced much more comfortably than they were, so unless we go into depression — which we’re not forecasting at this point — things look pretty good.”