CBSMarketwatch: Financial Crisis Enters New, Uncertain Stage

I've read iterations of this sort of story many times the past few weeks - to post them continuously would be overbearing but this version has some interesting points; along with harsh criticism I agree with - basically the Federal Reserve has become Wall Street's ... well you know.
We were told last summer losses en total would be $50-$100Billion; then $200 Billion; then $300 Billion. Now as we approach half a trillion, we've seen people who have called this thing "correctly" saying at least $1 billion. Meanwhile those who have got this wrong the whole way down, are assuring us we're in the 8th inning. (again) Common sense dictates who one should stake credibility with. We've long predicted the next stages [Jul 14: Reviewing December 2007's Roadmap & Views] which we are now just really entering but impatient Wall Street just wants it all tucked away in a box (with bailouts handed out to help them out of course) - the Federal Reserve is trying its best but gosh darn this one is hard to stuff back in the closet.

• The financial crisis has entered a new phase and will likely bring total credit losses above $1 trillion, according to a leading academic who has been studying the turmoil since its beginning a year ago.
• Princeton University economics professor Hyun Song Shin says the subprime mortgage crisis has already cost financial institutions roughly $500 billion. Now, however, the problem has spread to the real economy, and losses on credit cards, consumer and business debt should match or exceed those from subprime mortgages and the like, he said. "We'll see as much as the subprime losses again on the other side, at the very least." (ask where the capital will come from as we've exhausted most avenues with phase I - answer: your pocket... or no one's)
  
• The International Monetary Fund has estimated that financial institutions will suffer a total $945 billion in credit losses. Shin said that remained a credible number, but was still probably on the low side.
• "We are probably half way [through the financial turmoil], "Shin said. "The first stage is done - we're at the second stage. ... The real issue is how much is how much the prime mortgage portfolio is going to be affected. That is going to depend on how far house prices will fall."

• Since the start of the turmoil, the Fed has sought to pump cash into stressed financial markets. It has lowered its benchmark interest-rate target to 2.0% in a move seen as helping Wall Street's business of borrowing short-term funds to lend long. It also instituted a series of innovative cash auctions to primary dealers of government debt.
• Those moves, however, have resulted in the central bank taking many troubled assets onto its balance sheet. Several academics attending the seminar had heavy criticism of the Fed's actions.
• Willem Buiter, a professor at the London School of Economics and a former member of the Bank of England's monetary policy committee, complained that the Fed had not demanded any quid pro quo from Wall Street in return for the enormous amount of liquidity it provided.
• He said the Fed had blurred the distinction between what was in the public's interest and what was in Wall Street's interest, describing the recent performance as "not very good at all."
• Buiter said there was an acute concern that the Fed was subsidizing banks by taking their "pig's ear" illiquid assets at "silk purse" prices.
• He also said the Fed has been "pathologically secretive" about the terms on which financial support is made available to struggling institutions and counterparties.