Credit loss could hit $US1trillion

David Nason of “The Australian Business” thinks that there will be one trillion dollars of losses and that is will cause a recession. He also says the Federal Reserve might soon take the role of lending money to “everyone”. My concern is what happens when “everyone” does not pay the Federal Reserve back. I know, taxpayer government bail out. But who will bail out the government when the taxpayers are broke?

“But even estimates of a $US700 billion sub-prime bloodbath may be
conservative, with respected finance and economic blog sites like Calculated Risk predicting losses as high as $US1 trillion. The implications for global credit markets of losses of this magnitude would be horrendous, forcing banks and other institutions to slash lending by several trillion dollars. Combined with the rising cost of oil, the US would be plunged into a recession, the severity of which would depend largely on the policy responses taken by the Fed and the White House to restore confidence and liquidity.”