Goldman CEO says credit crisis in later stages

NEW YORK (Reuters) - Goldman Sachs Group (GS.N) Chief Executive Lloyd Blankfein said on Thursday markets are probably in the late stages of the global credit crisis that began last summer, but he would not predict when it will end.

"We're closer to the end than the beginning," Blankfein said at the bank's annual shareholder meeting. "I think we're getting to that point where people are seeing the light at the end of the tunnel."

He estimated the markets are more than half way to recovery, but declined to forecast how long the crisis would persist.

"Maybe we're at the end of the third quarter, beginning of the fourth quarter," he said, though he cautioned that a recovery may still take a long time.

"If you watch sports, sometimes there's a lot of timeouts in the fourth quarter. It takes longer to play than any of the other quarters, and sometimes it ends in a tie and goes into overtime."

That said, Blankfein told shareholders that Goldman always prepares for the worst as it weighs potential risks in its dealings.

"The world is nervous, and so are we," Blankfein said, adding that attitude always embodies the bank's approach to markets. "Our natural state of rest, even in good times, is to be very nervous," he said wryly.

Constant anxiety helped Goldman pull off one of the all-time great trades last year, when it bet securities tied to subprime mortgages would fall in value.

The bank's strategy generated billions of dollars in gains when the rest of the industry has been forced to write down nearly $250 billion of mortgages, corporate loans and other assets now difficult to trade.

Goldman's traders and bankers prepare for any number of events they can imagine, even if they are highly unlikely, he said: "It's not that anything can happen, it's everything will happen."

Blankfein's views carry a lot of weight in the market, as Goldman navigated last year's choppy waters and delivered record results.

Goldman shares, though well below their peak before the credit crisis, rose 12 percent last year and outperformed rival banks.

Earlier this week Morgan Stanley CEO John Mack, using a baseball analogy, also predicted the end of the credit crunch was in view.

The subprime mortgage crisis, he said, was in the "bottom of the eighth inning or top of the ninth," with the broader crisis gripping markets for "a couple of quarters" more.

(Reporting by Joseph A. Giannone; Writing by Jonathan Stempel; Editing by Brian Moss and John Wallace)