Goldman Sachs estimates cost of credit crunch

Banking firm Goldman Sachs has announced projections for the global cost of the ongoing credit crunch.

According to data released in a recent report, worldwide the credit crunch will lead to costs of $1.2 trillion (£600 billion).

Indeed, the organisation believes that loses of $120 billion have already been reported by financial organisations based in the US.

"There is light at the end of the tunnel, but it is still rather dim," said Goldman Sachs in its report.

"US leveraged institutions have written off less than half of the losses associated with the bursting of the credit bubble."

The firm also noted that loses totalling $480 billion will affect organisations such as brokerage firms and US-based banks.

In related news, the governor of the Bank of England has issued a warning to MPs, stating that the current crunch on credit could affect the UK economy for a length of time not previously expected.