LONDON, England – I've been accused by some of you of being too pessimistic, of having a dark cloud hanging over me, when talking about the economy and the credit crunch. But I don't make up the data, I just report and interpret it. I have been bearish and I continue to be bearish.
Call me Mr. Doom and Gloom, but if you want to call me that, then you better start thinking about names for the Fed and the IMF, because they too are speaking in dark tones.
The Fed now says its staffers expect the U.S. economy to shrink in the first half of the year. And some members of the Fed are now worried about the possibility of a "severe and protracted down" that could last into next year.
That's an even darker assesment than what Fed chairman Ben Bernanke painted publicly just last week during a congressional hearing. He admitted that a recession is possible, but suggested that by next year things would be looking much better.
Meanwhile, the International Monetary Fund is warning that losses from financial crisis could approach a trillion dollars. More than half of that would be suffered by the banks, with insurance companies, hedge funds, pension funds and others shouldering the rest.
"It is now clear that the current turmoil is more than simply a liquidity event, reflecting deep-seated balance sheet fragilities and weak capital bases, which means its effects are likely to be broader, deeper and more protracted," according to the IMF.
Just a reminder, those are the words of the IMF, not me. But I couldn't agree more. That's not being pessimistic, just realistic.
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