IMF Puts Subprime Loss Near $1 Trillion

St. Louis Post-Dispatch (04/10/08); Boak, Joshua
The International Monetary Fund (IMF) reports that the subprime mortgage mess could siphon nearly $1 trillion from the world economy, a loss that is only just beginning to have ripple effects throughout the United States and could worsen if it spreads deeper into the financial markets. IMF researchers have added up the bad mortgages, suspect securities and other commercial loans to project total losses of $945 billion. Jaime Caruana, director of the IMF's monetary and capital markets department, states, "It is important to repair balance sheets, to boost capital, and it will be necessary also that central banks continue to provide liquidity to financial markets." Only 20 percent of the projected losses from the subprime mortgage boom going bust have been reported so far, even as home foreclosures almost doubled in 2007--a trend the IMF said England now appears to be following on a one- to two-year lag.