Tuesday, 26 August 2008

Financial Crisis Enters New, Uncertain Stage

The financial crisis has entered a new phase and will likely bring total credit losses above $1 trillion, according to a leading academic who has been studying the turmoil since its beginning a year ago.

Princeton University economics professor Hyun Song Shin says the subprime mortgage crisis has already cost financial institutions roughly $500 billion. Now, however, the problem has spread to the real economy, and losses on credit cards, consumer and business debt should match or exceed those from subprime mortgages and the like, he said.

"We'll see as much as the subprime losses again on the other side, at the very least," Shin in an interview Saturday with MarketWatch on the sidelines of the Federal Reserve's two-day annual economic seminar in Wyoming.

The International Monetary Fund has estimated that financial institutions will suffer a total $945 billion in credit losses. Shin said that remained a credible number, but was still probably on the low side.
http://www.marketwatch.com/news/story/economist-sees-new-uncertain-stage/story.aspx?guid=%7BCD14AD72%2D143B%2D4794%2DA2A5%2DB34FE777F4BD%7D


[Posted at the SpookyWeather blog, August 26th, 2008]

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