They are "financial weapons of mass destruction," to quote the famous investor Warren Buffett as he surveyed the morning-after destruction of the sub-prime mortgage lending crisis. The continuing destruction can now be called a credit crisis—a significant escalation because credit has been the fuel powering the American economy for the past half dozen years. A whole galaxy of credit instruments has now been downgraded to the tune of hundreds of billions of dollars of paper losses. Another immediate effect has been a collapse in cash-out borrowing from home equity from about $700 billion in 2005 to $100 billion to date. At the same time, tighter lending and mortgage standards have contributed to a dramatic decline in residential construction from a high of over 2 million units to about 800,000 predicted for next year, with a related decline in employment. A slowdown in consumer spending seems inescapable. What is now seriously in question is the capacity of our financial system to provide enough credit to support the scale of investment that has maintained our long economic expansion. Coming at a time of soaring oil prices, we may have a simultaneous decline in consumer spending, residential investment, and business investment. The economy was strong in the third quarter but clearly dropping off by the end. We may be at the finish of not just the long-term borrowing bubble but the long-term spending bubble. The Federal Reserve must get ahead of the curve. Its priority must be to maintain the viability of the credit system and the flow of credit; our postmodern economy is dependent on an ongoing flow of credit. The problem for the Fed is that monetary policy may be no match for the deep structural contradictions that plague the financial system. We are dealing here with a whole new set of credit instruments that are little understood and therefore extremely difficult to price. The economy is clearly transitioning to much slower growth, sharply tighter lending standards, a declining housing market, and pressure on consumer spending. People and companies are trying to cope with the debt accumulated during several years of wasteful lending and spending. The real danger from a credit crisis is that everyone, from banks to corporations to households, may economize simultaneously. The collapse of values and the risks of the credit squeeze are the worst since the Great Depression. We are going to put the economy"s resilience to a severe test.
单选题
According to the first paragraph, which of the following seems to be the most serious economic problem now?