The credit crunch is far from over. Here are the five reasons why

Simon Nixon doesn’t believe that the credit crunch is anywhere near over after mid-July's stock market rally. Here, he explains why.

Well, that didn't take long. For a few heady days in mid-July, the markets let themselves hope the credit crisis, which celebrates its first birthday on 9 August, might be nearing the end. The rally was triggered by a fall in the oil price, prompt action by the Federal Reserve to prevent the collapse of mortgage bond insurers Fannie Mae and Freddie Mac, plus a handful of US banks reporting smaller losses. But it didn't last. This week's massive unexpected loss from Merrill Lynch, which has been forced to raise another $8.5bn in fresh capital, showed the crisis is far from over. But when will we reach the bottom? As I see it, there are five big risks.

1. Deleveraging

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Simon Nixon

Simon is the chief leader writer and columnist at The Times and previous to that, he was at The Wall Street Journal for 9 years as the chief European commentator. Simon also wrote for Reuters Breakingviews as the Executive Editor earlier in his career. Simon covers personal finance topics such as property, the economy and other areas for example stockmarkets and funds.