Thursday, July 17, 2008
Q: How long does it take for a penny to drop?
Now the damage is spreading. How far? Simplified, for every dollar of bank wealth lost, government-regulated commercial banks must eliminate some $10 of lending; for investment banks, the figure can be $30. The extent of the credit contraction to come will depend on the banks' initial losses—an elusive figure, to be sure, and one that keeps growing. The latest loss tally is $400 billion across the credit markets, but the International Monetary Fund says the total could swell to $1 trillion. Ray at Gardeniadotnet is quoted as saying, "$1 trillion? ....and the rest!"