Just yesterday I wrote a post about how the IMF is predicting that toxic debt will increase to nearly $4 trillion worldwide. Now, a recent report released by the Congressional Oversight Panel - those in charge of overseeing the TARP - indicates that $700 billion may be just the beginning in the U.S. (see ABC News article). To date, the TARP, Fed, and FDIC have set aside, lent, or spend more than $4 trillion.

New forecast from the International Monetary Fund are predicting that toxic debt will increase to nearly $4 trillion, due in part to the forecast of toxic assets in the U.S. rising from $2.2 trillion to $3.1 trillion (see Times Online article). Toxic assets across Europe and Asia will increase the total by another $900 billion. Given that "only" about $1.3 trillion has already been accounted for, the size of the money hole may be considerably larger than expected, requiring governments to bury more cash in an attempt to fill it up. As some have predicted (see Dealbook article), after the mortgage write-downs, banks will start unloading loans on the commercial side, and non-mortgage loans, such as auto and credit card loans, on the retail side. At some level governments are going to get spending fatigue and see increased levels of taxpayer revolt, or at least reach a level where saving the patient begins to bankrupt the caretaker and no longer makes sense.