A $3 Trillion Bankruptcy Will
Now Start To Emerge
Jan. 11, 2008 (EIRNS)—An experienced European banker told EIR this morning that "the problems of 2008 are of a completely different order of magnitude than those we saw in 2007."
We have entered a period now, he explained, in which large banks and financial firms are opening their books to external auditors, after having announced losses for the fourth quarter of 2007 according to their own internal surveys. But these external audits are now finding different values than those previously announced. (Surprise, surprise!—ed.) Thus, said the banker, we might expect a whole series of aggravated balance sheets, including legal bankruptcies of banks and financial companies.
Whereas the losses officially calculated by central banks are already tremendous, in the order of hundreds of billions of dollars, the real write-off concerns some $3 trillion, the source said. That is what is starting to emerge now.
Take this as the real context for the reports and rumors of $40 billion or so in "new" losses, swirling in recent days around just two financial firms, Citigroup and Merrill Lynch.