Roubini: Not even halfway there | FT Alphaville

Roubini: Not even halfway there

Nouriel Roubini is just a day late to make the most depressing day of the year just that little bit more painful, but his latest missive is sure to continue the pain into Tuesday.

By his calculations we are not even halfway through the fallout from the financial crisis. In fact, we seem at least a couple of trillion away from it:

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…

“The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.”

On commodities, Roubini is also proving to be the anti-Goldman.

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. “This outlook for commodity prices is beneficial for oil importers, it’s going to imply that economic recovery might occur faster, but from the point of view of oil exporters, this will be very negative.”

Related links:
Goldman oil bulls are back – FT Alphaville
Roubini: Let me count the ways it was a suckers’ rally – FT Alphaville