Roubini Predicts U.S. Losses May Reach $3.6 Trillion

Bloomberg has a shocking story on Roubini’s prediction for US losses: Roubini Predicts U.S. Losses May Reach $3.6 Trillion

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.

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“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.

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.

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Bank of America Corp., the largest U.S. bank by assets, posted a quarterly loss of $1.79 billion. Citigroup Inc. posted an $8.29 billion fourth-quarter loss.

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Oil prices will trade between $30 and $40 a barrel all year, Roubini predicted. I see commodities falling overall another 15-20 percent,” Roubini said.

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As seen in the USO chart, oil prices have been in a free fall. Every little rally is getting sold into. Lets see if it stays in the trading range as predicted by Roubini.

Banks have been in a absolute free fall and rightly so look effectively insolvent.



Roubini has been right on many many occasions and i have no reason to believe he is wrong this time too.