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World Financial System On 'road To Recovery', Imf Declares

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banks have marked to model their assets.

mark to market would mean the losses could really be counted.

Maybe the IMF dont even realise what the banks are doing....they beleive all the bullshite. In which case, we really are fracked as they try to fix a problem that is being understated.

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http://www.telegraph.co.uk/finance/finance...F-declares.html

The International Monetary Fund has declared for the first time that the world’s financial system is now on the “road to recoveryâ€, cutting its estimate of the amount of wealth likely to be destroyed by the crisis.

In what many will take as a convincing signal that the worst has now passed, the Fund used its closely-watched Global Financial Stability Report to reduce its estimate of losses derived from the financial crisis from $4 trillion ($4,000bn) to $3.4 trillion.

It said the improvement was due largely to the sharp increases in asset and equity prices around the world over the past six months. However, it said that losses facing banks specifically, as opposed to the broader financial system, remained unchanged at $2.8 trillion, of which more than half is still to be recognised.

Given that the IMF has been among the most pessimistic of all the major international institutions both on the state of the economy and the financial system, the news is likely to come as a welcome relief to markets. However, the Fund maintained that in spite of this, banks around the world still need to shore up their balance sheets significantly to ensure their health in the coming years.

The report said: “Systemic risks have been substantially reduced following unprecedented policy actions and nascent signs of improvement in the real economy. We appear now to be embarking on the road to recovery.

“Credit, however, remains strained, while household and financial sector balance sheet pressures and ongoing market dysfunctions remain drags on the recovery. This underscores the need for adopted policies to be more fully implemented, while others need to be fine-tuned or extended to ensure that confidence is restored further and credit channels are reopened.â€

Since the onset of the crisis in mid 2007, banks have written down $1.3 trillion worth of loans and securities which were effectively proved worthless in the wake of the sub-prime and securitisation bubble’s implosion, the report said. However, significantly, this is less than half of the total which it estimates will eventually need to be written off, with a further $1.5 trillion of “actual and potential writedowns†yet to be recognised between now and the end of next year.

Who feels a lot better now losses are only a mere $3.4tr.

Are they assuming that by 2011 there will be no more losses? Don't the US resets continue for several years?

Seems like they are trying to talk up confidence.

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