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IMF: 50% of bank losses not yet reported

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posted on Nov, 23 2009 @ 05:09 PM
link   
www.bloomberg.com...

This ought to rattle a few aprons.


"International Monetary Fund Managing Director Dominique Strauss-Kahn said that about half of bank losses from the global financial crisis have yet to be revealed.

“It is our view we are still in the situation where a lot of losses haven’t been disclosed,” Strauss-Kahn said during questions at the Confederation of British Industry’s conference in London today. “How much is a difficult assessment, but let’s say something which is close to half of it.”

Banking systems “remain undercapitalized” in many advanced economies with “far from normal” financial conditions, Strauss-Kahn said in a speech to the conference. The IMF said in September that banks may have $1.5 trillion in toxic debt remaining on their books, which may hurt credit markets and stifle the global economic recovery.

“Probably a little more has been disclosed in the U.S. and a little less in Europe, but it’s almost half and half,” Strauss-Kahn said. “So, we still have a long way to go.”

The IMF cut its projection for global writedowns on loans and investments by 15 percent to $3.4 trillion in September, citing improvements in credit markets and initial signs of economic growth. The IMF said then that U.S. banks have recognized about 60 percent of their expected losses, compared with 40 percent in both the euro area and in the U.K. "




posted on Nov, 23 2009 @ 06:25 PM
link   

Originally posted by leo123
www.bloomberg.com...

This ought to rattle a few aprons.


"International Monetary Fund Managing Director Dominique Strauss-Kahn said that about half of bank losses from the global financial crisis have yet to be revealed.

“It is our view we are still in the situation where a lot of losses haven’t been disclosed,” Strauss-Kahn said during questions at the Confederation of British Industry’s conference in London today. “How much is a difficult assessment, but let’s say something which is close to half of it.”

Banking systems “remain undercapitalized” in many advanced economies with “far from normal” financial conditions, Strauss-Kahn said in a speech to the conference. The IMF said in September that banks may have $1.5 trillion in toxic debt remaining on their books, which may hurt credit markets and stifle the global economic recovery.

“Probably a little more has been disclosed in the U.S. and a little less in Europe, but it’s almost half and half,” Strauss-Kahn said. “So, we still have a long way to go.”

The IMF cut its projection for global writedowns on loans and investments by 15 percent to $3.4 trillion in September, citing improvements in credit markets and initial signs of economic growth. The IMF said then that U.S. banks have recognized about 60 percent of their expected losses, compared with 40 percent in both the euro area and in the U.K. "



Actually it's alot worse. First of all you have to ask yourself why the 50% in losses are still being hidden. Their being hidden because because that half of the losses are the junk that is not worth a dime, in fact it's worthless and they are trying to make it seem like it's going to be worth something someday. The losses that they have shown are literally the good stuff, if they showed the stuff they are hiding it would tell everybody that said bank is truly insolvent. Two, the stuff they are showing isn't valued right. At the start of this year, the govt. made it okay again to Mark to Make believe instead of Mark to Market. That means that said bank or institution can say said financial instrument is worth this or that. When in reality Mark to Market would have those instruments worth penny on the dollar instead of dollar on the dollar or more. So whatever losses and "recovery" they are showing is just make believe to stop the bleeding. We still haven't got hit from the Commercial loans, the Prime borrowers of mortgages are defaulting and the work out loans that the govt. has praised is re-defaulting.

We haven't cured the problem, we have just papered over it with printing of money (swamping treasuries for toxic assets for short/long term) and letting some of the large banks and institutions just lie about their finances. The fed is in a serious problem, if they raise interest rates it will destroy the recovery and make whatever assets on the books of the banks become less. If they keep the rates low or zero essentially, it devalues the dollar and in essence will cause inflation if not hyperinflation (it hasn't been felt yet because banks aren't lending out money). So you have 50% of assets not being realized and the other 50% may have a large percentage that is Mark to Make believe. What you have is still at least a 75% problem of toxic assets not being realized, and the govt. covering it up by inflating the money supply.



 
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