Says expects upward revision of losses from some large european banks. Expects losses in the U.S. to move to regional banks, credit unions, and FHLBS. Expects outlook changes or one-notch downgrades for selected, especially thinly capitalized banks. Says downgrades will have implications for trading revenues, general business activity, bank liquidity.
From Reuters–sounds yucky.
This news reflects not only bad news for all Americans but will have a severe impact on the Episcopal Church since so many Dioceses and parishes are dependent on sizable endowments. Numerous Dioceses and parishes have been making up significant budget shortfalls by quietly raiding their endowments and selling off resources in order to meet expenses and giving the impression that all is well. However the problems with sub prime mess will make it impossible to continue business as usual.
$265 billion exceeds the inflation-adjusted cost of the Marshall Plan.
The amount of money lost and that will be lost to the housing melt-down is incomprehensible. Sir John Templeton predicted five years ago that housing values would fall to half in the United States during his life time. He was over ninty years old when he made the prediction. Of course the smart financial experts all dismissed his prediction. The question now is not if we will have a recession but are we heading into a depression. The Feds willingness to kill the dollar for the sake of keeping Wall Street going might indicate they are worried.
The S&L;crisis in the 1980s created losses in excess of $160 billion. Thats about $400 billion in today’s dollars. The remedy – the Reagan tax cuts.
The Reagan tax cuts came at a fortuitous moment: the US was NOT engaged in a ludicrous foreign war; the world economy still tilted toward the US (we were losing manufacturing from our shores, but the acceleration was yet to come); and the dollar was much, much stronger than today.
Today is much, much different. The biggest factor is that Mr. Bush’s Administration has put all of us under a pile of debt larger than all our previous debt added together. Trillions are tied to the continuing debacle in Iraq. And of course, we’ll have to finance the permanent bases which are going up around that benighted land. This crushing debt, coupled with our loss of manufacturing and the incredibly bad balance of trade all forecast very rough times ahead for US. Foreign investors (e.g., the Chinese, currently awash in cash) are already starting to pull back, they won’t long be interested in propping up our crumbling economy.
Sir John Templeton nailed it.