Reuters reports that Josef Ackermann, the CEO of Deutsche Bank, says that the credit crunch is almost over. It would have been worth reminding readers that Mr. Ackermann was completely caught by surprise by the onset of the mortgage crisis and the credit crunch. This would have provided them with more context with which to assess his perspective. Some of those who did see the mortgage crisis coming have pointed out that house prices are still falling rapidly and this is leading to a situation in which more mortgages are underwater and those that are already underwater are becoming even deeper underwater. This is an environment that invites defaults which will led to substantial losses for lenders. For this reason, the losses going forward are likely to be considerably larger than the losses seen to date.
--Dean Baker
