IMF: Toxic debt could reach $4 trillion
The International Monetary Fund is set to release a major assessment of the global economy at the end of the month and the results won't be pretty. The IMF estimates that the deepening recession could create up to $4 trillion in bad debts as more cash strapped people default on their mortgages, credit cards, and other obligations.
So far, the banks have only admitted to holding $1.29 trillion in bad debts:
Toxic debts racked up by banks and insurers could spiral to $4 trillion (£2.7 trillion), new forecasts from the International Monetary Fund (IMF) are set to suggest.
The IMF said in January that it expected the deterioration in US-originated assets to reach $2.2 trillion by the end of next year, but it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia. [Times]
(HT: Calculated Risk)