[KevO]

$this->bbcode_second_pass_quote('', 'R')euters) - The financial market crisis could cause losses of up to $600 billion at banks and other financial institutions worldwide, a German magazine reported on Saturday, citing an internal report by German financial watchdog BaFin.

The $600 billion figure represents a worst-case scenario for losses linked to the financial turmoil sparked by the meltdown in the U.S. subprime mortgage market, Der Spiegel magazine said in a story released in advance of publication on Monday.

"Based on current knowledge and the market situation, we believe $430 billion is more likely," the magazine quoted what it said was a 16-page report by BaFin as saying.

[Ferretlover]

Whew! Only $430bln as opposed to $600bln? We're saved!

[Armageddon]

What about the estimated 500-800 trillion dollars in derivatives ?

[steam_cannon]

$this->bbcode_second_pass_quote('Armageddon', 'W')hat about the estimated 500-800 trillion dollars in derivatives ?

[DantesPeak]

Keep in mind that while the Fed has already lent $300 billion to distressed and possibly insolvent financial institutions, along with $150 billion by the Federal Home Loan Bank Board, this does not to replace the capital that will disappear through $600 billion in losses. Capital is required for new lending.

In other words, who exactly is going to provide money to distressed companies to replace the losses that are or will be realized? I think eventually the Fed/Gov will step in to actually bail out companies, as we saw in the Bear Stearns case. But they can't say every bailout is in the national interest - although that's what Pauson's new plan actually means.

Meanwhile the collapse of leverage by the financial industry will cause lending to fall. The below market loan rate given by the Fed, that directly comes out of the pockets of US citizens, is not enough when financial companies realize more losses due to bad debts.

I see government intervention in the financial system coming that may exceed the unsual events in the early 1930s.

[heroineworshipper]

link

CNN is making another big push to get all subprime mortgage debt, and hence all consumer debt created since 2000, nationalized. Nobody's paying their mortgages anymore. Nobody's going to work. Would be borrowing as much as possible. It's a party like 1917.

[skeptik]

I think the name of the game now is 'Last Man Standing' . First the banks eat the hedge funds then they eat each other, supervised by the FED.

Bear Stearns was like the first play, or maybe an 'accidental kick off' as we'd call it in the UK.

What's left of the banking system at the end of the shakeout is in hock to the FED and effectively nationalised. FED uber alles.

[shortonoil]

skeptik said:

$this->bbcode_second_pass_quote('', 'I') think the name of the game now is 'Last Man Standing' . First the banks eat the hedge funds then they eat each other, supervised by the FED.

[americandream]

$this->bbcode_second_pass_quote('shortonoil', '[')b]skeptik said:

$this->bbcode_second_pass_quote('', 'I') think the name of the game now is 'Last Man Standing' . First the banks eat the hedge funds then they eat each other, supervised by the FED.

[steam_cannon]

$this->bbcode_second_pass_quote('americandream', 'T')his is more akin to a plague of rats without a food source.