The fallout from the U.S. mortgage crisis appears to be deepening.

In an article published this week on Bloomberg, the International Monetary Fund (IMF) has now estimated the potential price tag at some $945 million (U.S.). This figure is nearly four times the losses that have been recognized by financial institutions to date and signals that rougher waters are ahead for banking and the U.S. Federal Reserve System.

Liberal politicians appear to be reaching for the only solution they know, "tax and spend". You can't throw money at this problem. Increasing the deficit to try and prop up this mess only further weakens the green-back.

The lack of understanding of just how the problem we are in started is going to be the major issue here. We are in a down economic cyle amplified by the loan crisis. The cycle will occur and will conclude. Jobs will be lost, tax reveunes will fall, and the recession we are in will last for some time, like it or not.

Early this morning information was coming out that Citigroup and Merrill Lynch are about to disclose another $15 billion in mortgage-related investment losses this week. Even with the new disclosure both of these companies still have not come clean. Like many other banks, Citigroup's total risk-based capital ratio is under tremendous pressure. The choice is either raise more funds or reduce assets. 

Until the United States gets its economic house in order, e.g. spending, and borrowing, this mess will not abate.