New Forecast: $1 Trillion In Losses From Credit Turmoil
According to Bloomberg today, former World Bank President James Wolfensohn is predicting that losses from the global credit turmoil may climb to $1 trillion. Wolfesohn, who was the head of the Word Bank from 1995 to 2005, said after addressing the European Pensions and Savings Summit:
“It does seem to be a major adjustment on any level. There may be a $1,000 billion worth of losses in it somewhere.”
He added that he “cannot recall anything similar, certainly in the last 30 to 40 years that I’ve worked.”
Bloomberg’s Brian Swint wrote:
The International Monetary Fund predicts that losses from the crisis, including those tied to commercial real-estate, may total $945 billion and says global economic expansion may be the slowest since 2003 this year. Wolfensohn said the fund’s loss forecast of about $1 trillion is now a “consensus estimate.”
Data compiled by Bloomberg as of this morning shows the world’s biggest banks and securities firms have so far reported credit losses and writedowns of about $310 billion linked to the U.S. subprime meltdown.
Now an advisor to Citigroup, Wolfensohn concluded:
I’d have to say in my working experience, this is a different sort of crisis, largely because of the extent of the overhangs in financial markets. I don’t think in my working lifetime, I’ve seen challenges to the major institutions in terms of writedowns and impact on market capitalization.”
Source:
“Wolfensohn ‘Pessimistic’ as Financial Losses Rise (Update1)”
Brian Swint
Bloomberg, April 28, 2008
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