Financier says downturn could last 2 years

PARK CITY — The nation's current economic woes will last another six months and perhaps drag on two years, the managing director of Barclays Capital Corp. said Monday.

Speaking at the Park City Center for Public Policy's Post-Election Economic Summit, Theodore Roosevelt IV said the United States is "in the throes of a massive de-leveraging" and an economic "avalanche."

"As is true of an avalanche, there is not much you can do once it gets started. In sum, we are in this for a long haul," said Roosevelt, who worked for Lehman Brothers from 1972 until its acquisition by Barclays in September. "We may still be in the throes or just getting our heads above water by the time of the midterm election two years hence. I don't think we're going to get out of this for at least another two quarters, maybe eight quarters. This is probably going to be a long-term phenomenon."

Roosevelt told the audience of about 65 people that the downturn "will affect all of us, and we are going to have to learn again how we pull together."

He attributed the problems to "a long-standing compulsion" for Americans to live beyond their means, the country's failure to encourage savings, a Federal Reserve policy of "easy money," a regulatory system that failed to keep up with globalization, and unsustainable budget and trade deficits.

He suggested that certain policies could derail recovery, including closing borders to trade and raising taxes on sectors that can create jobs. He said the United States needs to diversify its energy-resource supplies and the government needs to approve a fiscal stimulus package. Saving needs to be valued over consumption, education needs reform and workers need the best available technologies, he said. But he cautioned against "overselling any particular agenda as a cure-all. There are no silver bullets."

He also sounded a hopeful note.

"The current situation in an opportunity for us to renew our faith in ourselves, tighten our belts and begin the process of leading the world into the 21st century. We owe it to our children and to their children," Roosevelt said. "Every generation before us has risen to that challenge, and we can, too."

Jim Hodges, a former governor of South Carolina and one of several national co-chairmen of President-elect Barack Obama's campaign, said there are no quick fixes to the economy. He said the economy will be "Issue one, two, three, four, five"

for Obama after he takes office, with much of the first-year legislation trying to address "the myriad economic problems we have."