Banks To Lose $1.6 Trillion
According to an article in Sonntags Zeitung, the banks are only a quarter of their way through announcing their losses.
The story was based on a report apparently leaked from Bridgewater Associates, who call themselves an “investment company that manages $150 billion in global investments for a wide array of institutional clients.”
What’s interesting is that as time goes on the number just gets bigger. Back in April, the FT reported reported the figure as $1,000 billion. In June, the Telegraph had it at $1,300 billion. What next, you may wonder?
The Sonntags Zeitung story yesterday said:
Westport (USA) - The expected losses from the financial crisis will reach $1600 billion. Financial institutions have so far announced only $400 billion. This pessimistic forecast comes from a confidential study by Bridgewater Associates, the second largest hedge fund in the world.
“We are facing an avalanche of bad assets,” says the study. The biggest losses so far were with the U.S. credit banks. “We have big doubts that financial institutions will be able to raise enough new capital in order to cover the losses,” the authors write.
Bridgewater Associates in financial circles enjoy a first-class reputation, several central banks are among its customers. “Bridgewater are on the pessimistic side,” says George Magnus, Senior Economic Adviser at UBS in London, “but they have it absolutely right.”