Global Credit Crisis: $1.2 Trillion and Counting

by: Andrew Horowitz March 26, 2008 | about stocks: GS / JPM / MER    

Andrew Horowitz

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A report released at 1:30pm EST by Goldman Sachs is estimating that the global credit crisis is going to cost over a trillion dollars. Unfortunately, only a fraction of the amount has been written off so far. The analyst estimates that 40% of the amount will be seen in the brokerage sector and throughout Wall Street.

Just as many were thinking that the other shoe was not going to drop anywhere near them, the entire closet of Imelda Marcos comes puring down. In response, the brokers (LEH), (GS), (JPM) etc, fell, well off their highs for the day. It is now clear that the problem is MUCH bigger than anyone has even imagined.

Let’s all agree to the fact that this is not the end…This is still an estimate and unless we get a good amount of full disclosure and cooperation from the brokers and Wall Street, the pain (torture) will continue. No one like surprises and if anything is for sure, investors are scared of what lives in the dark. I know I do.

Guys, get your stories straight already!

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This article has 4 comments:

  •  
    Mar 26 04:50 AM
    Only a trillion!? Did they add Auction Rate Securities to the mix? $330 Billions are now locked up and either can't participate in any markets/ real estate purchases or will be forked by the banks and brokerage houses in question if investors suceed in their massive law suits.
    ARSclassAction.com

    I say 1 trillion is a way to conservative, I see more thna that in USA alone.
    Reply | Link to Comment
  •  
    Mar 26 05:22 AM
    Wow... it almost seems like the next shoe to drop doesn't even have to be actual writedowns, it only has to be a forecast by the #1 of "one of us" Goldman Sachs to strike fear. Why would they do that? Are their trading desks themselves shorting financials? Why would they sabotage when a few lovely Spring bulls were starting to see new life? DJIA futures already down already down 60 points.

    Goldman Sachs forecasts global credit losses stemming from the current market turmoil will reach $1.2 trillion, with Wall Street accounting for nearly 40 percent of the losses???

    U.S. leveraged institutions, which include banks, brokers-dealers, hedge funds and government-sponsored enterprises, will suffer roughly $460 billion in credit losses after loan loss provisions, Goldman Sachs economists wrote in a research note released late on Monday.

    They're shorting something and leveraging their reputation to drive it down. What was it? Are they trying to drive down their own price to buy back shares? What's the INCENTIVE to disclose?
    Reply | Link to Comment
  •  
    Mar 26 10:19 AM
    I read that MS began shorting a while ago, so it pays for the firm to spread more dismal news. Are there rules requiring firms to disclose their position for investment comments?
    Reply | Link to Comment
  •  
    Mar 26 12:31 PM
    ssshhh, don't tell the equity markets...
    Reply | Link to Comment
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