Goldman sees subprime cutting $2 tril in lending

-- The slump in global credit marketswill force banks, brokerages and hedge funds to cut lending by $2 trillion, triggering the risk of a ``substantial recession'' in the U.S., according to Goldman Sachs Group Inc. --Losses related to record U.S. home foreclosures using a``back-of-the-envelope'' calculation may be as high as $400billion for financial companies, Jan Hatzius, chief economist at Goldman in New York wrote in a report dated yesterday. The effects may be amplified tenfold as companies that borrowed tofinance their investments scale back lending, the report said. --``The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognized,'' Hatziuswrote. ``It is easy to see how such a shock could produce asubstantial recession'' or ``a long period of very sluggishgrowth,'' he wrote. --forecat reduction in lending is equivalent to 7% of total U.S household, corporate and government debt. --WS banks have written down more than $50 bil on seucrities related to U.S. subprime mortgages