Meredith Whitney feels pessimistic about the economy and financial system, because the government has run out of ways to provide support.
“The government has played such a ... central role in the capital markets this whole year. You’ve really had to bob and weave around what they’ve been doing,” she told CNBC.
The government has kept credit markets afloat by supporting the housing market, buying agency paper etc., Whitney said. “I think they're out of bullets."
Consumers and small businesses are still shunned in the credit markets, she says.
"What's so frustrating is you have an administration that is arguing such a populist (ideology) and not appreciating all the unintended consequences that the consumer and small businesses have far less credit," Whitney said.
"You're going to get a situation where you revert from a consumer standpoint, where those that had bank accounts for the first time, credit cards for the first time, homes for the first time get kicked out of the system and then fall prey to real predatory lenders."
Consumers account for 70 percent of the economy, and they’re in trouble, Whitney says.
"I have 100 percent conviction that the consumer is not getting any better.”
Many agree with Whitney, and even Federal Reserve Chairman Ben Bernanke expresses caution about the economy.
"We still have some way to go before we can be assured that the recovery will be self sustaining," he said in a speech.
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