Monday, July 21, 2008

As faith in bank bailouts dims, losses set to deepen

"You see a massive potential for financial meltdown on a global scale," said T.J. Marta, fixed-income strategist at RBC Capital Markets.

Wed Jul 16, 2008 4:59pm EDT
By Pedro Nicolaci da Costa - Analysis

NEW YORK (Reuters) - The nightmare scenario for U.S. economic authorities is here: confidence in their ability to rescue the country from a housing-led financial panic is now at its lowest level since the crisis began.

This means losses for investors, already totaling nearly half a trillion dollars, could mount even further over the next few months, with implications for business investment and the overall health of the economy.

"You see a massive potential for financial meltdown on a global scale," said T.J. Marta, fixed-income strategist at RBC Capital Markets.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, testified before Congress this week on the country's precarious financial state. They were met with unusually fierce questions from lawmakers on the feasibility of a plan to provide extra funding for mortgage finance giants Fannie Mae (FNM.N) and Freddie Mac (FRE.N).

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