About the Post

Author Information

Sub-prime losses could near half a trillion dollars: study

TOKYO – Potential losses from US mortgage woes could top US$460 billion worldwide with aftershocks to be felt until late 2008, a Japanese private think tank estimated on Friday.

The Japan Research Institute said in a report that combined losses to be suffered by financial institutions and investors worldwide could reach US$463.6 billion ‘in the worst-case scenario’.

‘We forecast the situation will not subside at least until the latter half of this year as the ratio of default is projected to rise,’ the institute said.

‘2008 is likely to mark a turning point in the picture of global finance due to the sub-prime issue,’ it said.

Global markets have been battered since last year by rising defaults by sub-prime, or high-risk, loans given to US homeowners during a housing boom. The turmoil has raised concern of a credit crunch as banks try to contain losses.

The latest round of bleeding on markets was triggered by weak earnings reports by leading US financial institutions.

Markets on Friday trimmed heavy initial losses with all eyes on an expected stimulus package to be announced by US President George W. Bush. The package will aim to steer the world’s largest economy away from recession.

 

Source: AFP (Business Times 18 Jan 08)

Advertisements

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: