Credit losses 'may reach $400bn'

[lovuian]

http://news.bbc.co.uk/2/hi/business/7098368.stm

Financial companies' losses due to the US sub-prime crisis could be as much as $400bn (£190bn), US investment bank Goldman Sachs has said.

The estimate by Goldman's chief economist Jan Hatzius is higher than that of the Federal Reserve but in line with some recent independent forecasts.

Mr Hatzius predicts leveraged investors may have to reduce their lending by $2 trillion as a result.

"The macroeconomic consequences could be quite dramatic," Mr Hatzius said.

He said the development could lead to a "substantial recession" if it happened over a year, or to a prolonged period of weak economic growth if it occurred over up to four years.

'Wrong analogy'


The associated downward pressure on lending raises the risk of significant weakness in economic activity
Jan Hatzius at Goldman Sachs
The economist's calculations are based on the estimate of investors cutting lending by $10 for every $1 in losses and on the assumption the investors would see half of the potential losses of $400bn.
more...
Credit Crunch Ouch

[cliss]

1. I got news

The system is completely broke. We should be thankful, because they are letting the Titanic sink stateroom by stateroom.

They are simply unable to control the bleeding. It's only just started. Notice? There's no more talk about some government "bail out" or some new pending legislation to prevent this from happening again.

Also, notice the number of people leaving the government. Especially Repugs.

[lovuian]

2. Titanic is right and the musicians are on the top deck

playing (TV MEDIA )

while it sinks

[Neshanic]

3. Actually double that. It's a family tradition. Poppy's RTC and numbnuts housing bubble.

When all is said and done, maybe 800 billion. Of course this will be apparent around 2015.

[enid602]

5. an even trillion

I disagree. Numbnutz's debacles (Iraq, Medicare Rx, tax cuts for rich) always seem to cost us an even trillion. Guess it makes the accounting a bit easier.

[scarface2004]

4. so what's the big deal!

bush keeps smirking as trillions go down the drain!

[lovuian]

6. this is a repeat when Germany's money had a major

meltdown before WWII

they want chaos so they can steal even more