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IMF report: global crisis to cost over $4 trillion, last another 18 months



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There really isn't very much positive news in the new IMF report. The best I could find is that the US won't be the largest financial loser as Europe is expected to lose slightly more. The IMF still sees a lot more problems ahead and hundreds of billions more to be written down.

Should global writedowns hit $4.1 trillion, as the IMF expects, it would mark a staggering further slump over the next 18 months, according to analysts, who pointed out that, in the current meltdown so far, financial institutions have written off only $1.3 trillion. The IMF called for a "thorough cleansing of banks' balance sheets of impaired assets, accompanied by restructuring and, where needed, recapitalisation".

The half-yearly report from the IMF is closely studied by markets, and will be discussed by the Group of Seven and Group of 20 economies on Friday.

Peter Dixon, an economist at Commerzbank, said: "This is a bleak number and there is clearly still some way to go, and the banks face much more pain." He added, however: "This number is the worst-case scenario."
The problem is that we've been surpassing the "worst case scenario" time after time. Eventually this won't be a problem but it's important to avoid yet another worst case report.


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