Tuesday, April 8, 2008

The new price tag: $945 billion

$200 Billion (nope)
$400 Billion (nope)
$550 Billion (nope)
$800 Billion (nope)

According the IMF the new cost of the subprime credit crisis is $945 billion globally. Over $565 billion of losses are expected for U.S. residential loans and securities. The figure has risen to $240 billion for commercial loans.

"The U.S. subprime crisis is not only eroding the U.S. economy -- the world's largest -- but also wreaking havoc on global financial markets, including Japan's stock and currency markets. "

There appears to be one item that the U.S. is very good at exporting – our credit crisis.

In other related news, it appears that the Wall Street investment banks are hooked on emergency funds. As outlined in an earlier HingeFire article, these financial institutions built on risk-taking are borrowing over $38 billion each day from the Federal Reserve.

The program was designed as a temporary measure to alleviate the credit crisis; it appears that the investment banks are using it as a payday scheme to make further bets in the market. Finally the mainstream press is coming to grips with the story, stating that the Federal Reserve will need to wean these banks off of these loans, similar to taking the needles away from a heroin addict.