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Whew!....and ouch!

No wonder there is what is now called the sub-prime mortgage crisis in the US and talk of recession not only in America but also in other parts of the world......

SMH Business Day reports that Goldman Sachs in the US estimates the losses caused by the sub-prime mortgage debacle at a cool US$460 billion.

"Wall Street banks, brokerages and hedge funds may report $US460 billion ($503 billion) in credit losses from the collapse of the subprime mortgage market, or almost four times the amount already disclosed, according to Goldman Sachs Group Inc.

Goldman said the credit losses it foresees may ''result in a substantial tightening in credit conditions as these institutions pull back on lending to preserve their reduced capital and to maintain statutory capital adequacy ratios.''

Profits will continue to wane, other analysts said.

''There is light at the end of the tunnel, but it is still rather dim,'' Goldman analysts including New York-based Andrew Tilton said in a note to investors Tuesday. They estimated that residential mortgage losses will account for half the total, and commercial mortgages as much as 20%."

Needless to say the question to be asked is whether the high-flying executives who brought the whole crisis about in the first place will be brought to book. Don't hold your breath!

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