- total loss facing banks, as estimated now by Bridgewater Associates – the world’s second largest hedge fund.
The figure trumps the previous highs of $1,300bn estimated by John Paulson and before that, $1,000bn, from the IMF. The Bridgewater figure comes from a leaked report in Swiss newspaper Sonntags Zeitung, as picked up by Paul Kedrosky – who kindly translates the opening pars:
Westport (USA) – The expected losses from the financial crisis will reach $1600 billion. To-date financial institutions have so far announced only $400 billion. The 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 were the U.S. credit banks before. “We have big doubts that the financial institutions will be able to have 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.”
Related links
Banking system losses to hit $1.6 trillion? – Naked Capitalism