A number of recent estimates have calculated the projected direct losses of the mortgage related credit crunch at over $500 Billion. This figure primarily focuses on the write-downs at banks and other institutions.
A recent estimate on the overall impact of lending by Goldman's chief U.S. economist, Jan Hatzius, places the reduction in lending at over $2 Trillion. This type of scale-back has the significant probability of triggering a recession or causing a subpar growth scenario over the next few years. Remember the old expression about 'the economy slides on a slippery slope of loaned money." Any type of reduction in mainstream lending to worthy creditors has a negative impact on macro-economic growth.
Economist: U.S. facing $2 trillion lending shock
Goldman Sachs analyst predicts impact from credit crunch
http://www.msnbc.msn.com/id/21834052/
Friday, November 16, 2007
Credit Crunch = $2 Trillion Shock
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