Balance Sheets Shrink

The U.S. economy is repricing credit right now,Mohamed El-Erian continued.There is no perfect response to the credit crisis.The credit meltdown will hurt U.S. employment.The unthinkable is now thinkable in this market.This is a world of very high risk,but also opportunity.This is not a time to seek lots of risk.Herd behavior is typical of markets.Expect to see more banks access the Federal Reserve's discount window.At this time,three balance sheets are all deleveraging:1.the housing market;2.the financial system;3.US. households.Probably there will be a resolution of the crisis in 2009,Mr.El-Erian conjectured.