Financial services veteran Hans-Joerg Rudloff said the worst may still be to come for the already battered financial markets but if war broke out between the US and Iraq, economic recovery could be sooner rather than later.

Mr. Rudloff - chairman of Barclay Capital, a post he has held since 1998 and formerly an executive of Credit Suisse First Boston as well as chairman of family firm MC BBL Securities - stressed that his comments on the economic ramifications of possible war would depend on if war action was a "fast relatively clean affair" not a case of prolonged guerrilla warfare.

Mr. Rudloff said the markets had reached a dire point not seen since the 1930s and the chance of a quick recovery were made more difficult in a climate of prevailing investor distrust after being burned time and time again by corporate leaders fudging the books and cheating investors.

Mr. Rudloff cited the current state of the markets as new territory but praised the tack taken by America:"Everyday (stock) prices are going down. But people are being called to account. And credit has to go to America, which has attacked its abuse."

And although Mr. Rudloff did not put a timeline on market recovery, he hazarded a guess that America could take further action to bolster the flagging economy.

One way this could possibly be accomplished, he said, would be war with Iraq as one of the largest oil producers in the world or another action could be the devaluation of the US dollar.

Mr. Rudloff said on the subject of possible war, if Iraq was "brought in line" it could create much lower oil prices which could prove to be a major factor in economic growth.

"I can't tell you what will happen but these are the potential policy responses," he said.