Lobo's Investment

Goldman Sachs economist says mounting credit losses could force banks to significantly scale back their lending. They think that the housing slump is expected to end up costing banks, hedge funds and other lenders an estimated $400 billion. A $400 billion loss is equal to just about 2.5 percent of U.S. stock market capitalization. A bank that aims to maintain a capital ratio of 10 percent would need to shrink its balance sheet by $10 for every $1 in credit losses.By this factor, the credit losses is about 25% of U.S. market capitalization. That sounds horrible. The premptive move of the Fed a few months ago creates money and should avoid a crash. The next question will be: Is the drag on economic activity significant and substantial?

I just start to look for bargain H-shares ...