Another one in the can for Nouriel Roubini. He first mooted an estimate of $1 trillion in financial losses from the subprime fallout back in February. The IMF is the latest to fall, almost, into line.
See the 2008 Global Financial Stability Report, all 211 pages of it (rather more diminutive executive summary also available).
The IMF estimates total global losses from the deterioration of credit as of March at $945bn, with $565bn coming on residential mortgages and related securities. The remainder is broken down into $240bn on commercial real estate, $120bn on corporate debt and $20bn on consumer debt. The full break down is on page 51.
Its numbers come out some way above other recent estimates - even taking into account that about half the IMF estimate on subprime mortgage-related losses will hit banks. S&P last month put total writedowns on subprime-related ABS at $285bn, with about $110bn already taken by the banks and $150bn logged in total. The agency didn’t include government sponsored enterprises in its figures.
According to the IMF, US banks and GSEs could report a further $49bn in writedowns, while European banks could be set for a further $43bn. The full breakdown is below.
In any case, as Alea suggests, the IMF report is rather damning, citing a “collective failure” to appreciate the extent to which leverage was being taken on by institutions, and indicating that if anything the credit crisis is still playing out.
For those perplexed by what’s going on, the IMF’s monster report should provide some pointers, if little succor. It even has a section, page 23, entitled, “Credit squeeze, or credit crunch?”
Related links
Credit crisis is broadening, IMF warns - Alea
Reports of credit crunch greatly exaggerated? - FT Alphaville
