Meltdown losses of '$4 trillion'

[BelgianMadCow]

Source: BBC

The International Monetary Fund (IMF) has warned credit crunch losses could reach $4 trillion (£2.75tn), damaging the financial system for years to come.

It says that even if urgent action is taken to clean up the banking system, the process will be "slow and painful", delaying economic recovery.

...

One year ago, the IMF estimated that total losses from the credit crunch would be $1 trillion, which has been exceeded, showing how rapidly the financial meltdown has escalated.

The IMF now says that banks are likely to lose $2.7 trillion, but other financial institutions such as insurance companies and pension funds are also coming under strain.

Read more: http://news.bbc.co.uk/2/hi/business/8009734.stm

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The article proposes the public comes up with the extra capital needed. Someone explain me again why we have to pay for hot air please.

Insolvency -> receivership -> management out -> truth about the assets -> breakup of too big to fail / just let go poof all bets between parties not holding the underlying assets / return to traditional banking (deposits, loans, what Krugman called the Marble Banks we all associate "bank" with, as opposed to the Shadow Banking System)

In the US budget ,and in the belgian one I might add, another bank bailout round is already foreseen. Anyone else have the feeling we are being spoonfed info about the size of the crisis? The constant change in forecast is getting a bit ridiculous. It's as if they could not foresee the effects on the real economy. Companies started laying off 10-15 % a couple months in! Rupturing the link between financial and real economy is key says the IMF. Well, let the banks that deserve it go poof and effing STOP spending our real economy money!

[RUMMYisFROSTED]

1. All I know is that the IMF is looking out for my best interests.

[BelgianMadCow]

2. plus, the Fed also has your back

and your front, bottom and top.

[RUMMYisFROSTED]

3. You know it.

[IthinkThereforeIAM]

4. What a mess those unregulated derivatives have created...

...eom.

[BelgianMadCow]

6. total derivative market: 600 trillion, of that credit derivatives make up 60 trillion

Out of the 600 trillion derivative market, the largest part are over-the-counter - meaning not exchange-traded and I think much less regulated. The clearing houses the G20 said ought to be established tackle specifically that problem.

In the credit derivatives market, some 70% are interest based. If the financial crisis spreads to those - oO

I got the data from Wikipedia: http://en.wikipedia.org/wiki/Derivatives_market and related pages.
I find them interesting as they can be considered the absolute worst case bailout, the upper limit. Looking at the 10+ trillion via different programs or the latest 2 trillion quantitative easing :puke: you get a sense of where we are today...

Disclaimer: I'm no economist

[dgibby]

5. All part of the plan, imo.

How will Globalization and Free Trade work if everyone isn't on a level playing field? It's easier to bankrupt more affluent countries than to enrich the poorest of the poor.

[RedCloud]

7. Woikers around the woild refuse to woik. Now start rock economy.

What would those pigs do if the working people left them out to dry?

Start a new economy. Rocks are plentiful. Lots of folks would start off just fine.

[BelgianMadCow]

8. You have rock? Gief!

I have a hard place, let's all be between us more.

Woikers revolt, I like it. Also, consumer revolt. Revolt requires uncouching of potatoes - very sticky.

[RedCloud]

9. Fine idea. Let's not play their rules anyway.

The game is totally rigged for their benefit.