Credit crisis losses may hit $400bn - Goldman Sachs

Goldman's chief economist Jan Hatzius says the situation has deteriorated significantly since Federal Chairman Ben Bernanke predicted mortgage related losses of between $50bn and $100bn back in July. Hatzius says leveraged investors may have to reduce lending by $2trn as a result of the write-offs and the macroeconomic consequences “could be quite dramatic”. He noted a "substantial recession" could even be on the cards if it occurred over course of one year. "The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognised," he says. "While...