Tuesday, August 5, 2008

The banks will become insolvent because of mounting losses as a result of the housing bust

Hundreds of banks will fail, Roubini tells Barron's

NEW YORK, Aug 3 (Reuters) - The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron's in Sunday's edition. Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said -- at least $1 trillion and more likely $2 trillion.

Posted by malct @ 11:28 AM (498 views)
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4 thoughts on “The banks will become insolvent because of mounting losses as a result of the housing bust

  • mountain goat says:

    Great post thanks I respect Roubini a lot.

    “Now, Roubini told Barron’s, the government is overregulating, bailing out troubled participants and intervening in every market.” – central banks intervened in every market when Greenspan slashed IR and kept them there, so nothing new there.

    “Of three dozen or so medium-sized regional banks, a good third are in distress,” he told Barron’s, saying half of the group could go bankrupt. Some big banks could wind up insolvent, he added, but said they might be deemed too big to fail.” – yep my thoughts exactly, letting banks fail means letting the system fail. This is not going to happen, expect many “creative” interventions in future like the Bear Stearns / JPMorgan Chase bailout.

    “Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said — at least $1 trillion and more likely $2 trillion.”- yep that means you and me will pay for this hpc I’m afraid.

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  • Imagine swapping these Toxic Securities for Treasury Bonds. They have literally thrown the Country’s money to the dogs. That’s money belonging to the Citizens. Placing every Ordinary Taxpaying Citizen within a lifetime of debt and effectively devaluing the currency.
    Someone mentioned ‘isolationism’ being the outcome at some point and this looks like a natural future consequence.
    The banks that go under are likely to be ‘community banks’ not the big players and this will have a drammatic social effect in breaking down established communities.
    Nationally there will be a need to go out and obtain by force the materials needed to maintain economic strength because the materials are in danger of becoming simply too expensive.
    This spells out War and Isolationism to protect the strongest at the expense of innocent countries. The Warning is clear.

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  • mountain goat said:
    “Great post thanks I respect Roubini a lot.”

    Yeah, there’s some Alex Jones interviews of Roubini on YouTube if you like what Roubini has to say. Maybe you have watched them already!

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  • mountain goat says:

    Yes thanks Denzil have watched a few.

    I forgot to mention at 1. we in the UK already know all about taxpayers bailing out banks in the form of Northern Rock.

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