Total mortgage problems, $945 billion?
Filed under: Analyst reports, Forecasts, Bad news, Economic data, Housing, Recession
The International Monetary Fund now estimates the fallout from the mortgage crisis could total $945 billion. If so, banks and brokerage companies should prepare for another huge round of layoffs. According to the FT : “Banks would suffer slightly more than half the total losses, with the rest falling on insurance companies, pension funds, hedge funds and other investors.”
If the report is right, a number of institutions could suffer great losses. The first and foremost among these are pension funds, the cornerstone of retirement payments for many Americans. Heavy losses at these operations could undermine plans for ten of thousands of workers by eroding the value of money meant to carry them after they have ended their working careers.
The IMF is also issuing an important caution. If central banks and governments cannot get control of the present problems, they will get much worse.
The new report probably puts the extent of possible damage at a level higher than many other estimates have. But, the fact of the matter is that banks do continue to find more reasons for write-offs and that process does not seem to be ending. Economists looking for the bottom of the housing and foreclosure crisis are not finding it.
The bottom could be a long way off.
Douglas A. McIntyre is an editor at 247wallst.com.
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