Wednesday, January 21, 2009

US Banks Insolvent

Well, this certainly does simplify things doesn't it? The sooner we internalize the fact that our whole banking system, the sooner we come to the obvious conclusion: Jubilee! We can either do this the easy way (Jubilee) or the hard way (deflationary depression).

Roubini: US Banking System Insolvent, Another $2.5 Trillion Of Losses Coming

Henry Blodget | Jan 20, 09 10:05 AM
A couple of years ago, when Nouriel Roubini predicted that US financial-system losses would total $1 trillion, everyone thought he was insane. He has since revised his estimate. Now he's looking for $3.6 trillion:

Bloomberg: U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini, who predicted last year’s economic crisis.

“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg.

President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News. Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed.

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