Banks Losses $2 Trillion; $1 Trillion Floor
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Loss Ranks 6th Among Nation’s Gross Domestic Product - Size of Italian Economy
Clinton White House economist Nouriel Roubini has made an ominous prediction that banks could lose $2 trillion. “At this point, $1 trillion isn’t a ceiling, it’s a floor,” says Roubini. “The banks are playing all sorts of accounting gimmicks not to recognize them,” he says.
He says the damage was actually done earlier, when the Alan Greenspan Fed lowered interest rates in 2001 following the dot-com bust, and then kept them too low for too long. Ironically Roubini served in the Clinton White House for Bill Clinton’s two terms while Greenspan also served as Fed Chairman and there is growing evidence the problem’s started during the dot.com debacle and was poorly handled. Analyst say it was like a freight train starting up with each coupling taking up a little slack until there is a neck snapping jolt at the caboose.
Roubini who says, the Fed and other regulators were “reckless” in regulating the financial sector. He says it is now a matter of overregulating now. The assorted bailout “is socialism for Wall Street and the rich.” The American taxpayer is going to have to foot the bill, which Roubini says is going to be “huge.”