IMF: Credit Crisis Could Cost $945 billion

The International Monetary Fund isn't known for exaggeration and hyperbolic predictions. So the group's latest report on the credit crunch really caught my eye. The IMF says that falling U.S. home values and rising mortgage delinquencies could ultimately cause $565 billion in losses. If you throw in losses on commercial real estate securities and other corporate and consumer losses, you get as much as $945 billion in crisis-related costs, according to the group. Bloomberg pegs asset writedowns and losses to date at only $232 billion, meaning much more could be coming down the pike.

A key quote from the IMF release on this report:

"Financial markets remain under considerable stress because of a combination of three factors," said Jaime Caruana, head of the IMF's Monetary and Capital Markets Department. "First, the balance sheets of financial institutions have weakened; second, the deleveraging process continues and asset prices continue to fall; and, finally, the macroeconomic environment is more challenging because of the weakening global growth," he added.

If you want to read the full report, by the way, make sure you have broadband. The PDF file clocks in at 211 pages.