dmarc117 Posted January 21, 2009 Share Posted January 21, 2009 http://www.bloomberg.com/apps/news?pid=206...&refer=home Jan. 20 (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. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted January 21, 2009 Share Posted January 21, 2009 http://www.bloomberg.com/apps/news?pid=206...&refer=home So, a loss of that amount indicates that each bad mortgage is counted multiple times because the idiot banks sold them off to each other over and over, therefore each buyer take a loss, is that right? Or what? Oh yeah - let's let nature take it's friggin' course. The money distributed so far is simply sitting in bank vaults doing nothing. One small but very wealthy bank received about $146 million and the chairman said it would be handy for acquisitions later - no intention of spending it at all. Why should we continue to bail these idiots out? Either let them go bust or nationalize them. Quote Link to comment Share on other sites More sharing options...
muck Posted January 21, 2009 Share Posted January 21, 2009 So, a loss of that amount indicates that each bad mortgage is counted multiple times because the idiot banks sold them off to each other over and over, therefore each buyer take a loss, is that right? Or what? El-wrongo. Bank capital would generally look like: $100 of assets (loans, etc) ...supported by... $92 of deposits, debt and other liabilities $8 of equity (both preferred and common) ...so, if the $100 of assets lost more than $8, the bank would be bankrupt...before it would ever get that bad the FDIC would step in to try to right the ship (if you will)... What Roubini says is that with the losses (regardless of where they came from ... a mortgage, a loan ot Lyondell Chemicals (who recently declared bankruptcy), or some other person or business) that may come will be about $20 on a starting place of an $8 equity base ... Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted January 21, 2009 Share Posted January 21, 2009 El-wrongo. Bank capital would generally look like: $100 of assets (loans, etc) ...supported by... $92 of deposits, debt and other liabilities $8 of equity (both preferred and common) ...so, if the $100 of assets lost more than $8, the bank would be bankrupt...before it would ever get that bad the FDIC would step in to try to right the ship (if you will)... What Roubini says is that with the losses (regardless of where they came from ... a mortgage, a loan ot Lyondell Chemicals (who recently declared bankruptcy), or some other person or business) that may come will be about $20 on a starting place of an $8 equity base ... So losses on the mortgage market could not be greater than 8% before bankruptcy or bailout was required? Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted January 21, 2009 Author Share Posted January 21, 2009 I work for a US bank, in credit card collections. Projections were that X was going to bill into 30-dy (2 payments delinquent), this month. The actual bill-in was 2.2X. Only a very few economic prognosticators are "doomsayers". I have agreed with them the entire time . . . and still do. so 2x the peeps are 2 payments late?? dam....buy the bunker now!! Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted January 21, 2009 Share Posted January 21, 2009 I work for a US bank, in credit card collections. Projections were that X was going to bill into 30-dy (2 payments delinquent), this month. The actual bill-in was 2.2X. Only a very few economic prognosticators are "doomsayers". I have agreed with them the entire time . . . and still do. I don't find that at all surprising. If I was floundering around the way a lot of people are, the first debt I'd default on would be the credit card because it's unsecured. The last would be the mortgage - we would be sitting on boxes with the gas and electricity shut off before I defaulted on the mortgage. Quote Link to comment Share on other sites More sharing options...
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