Thursday, February 12, 2009

Credit problems ahead

Here is a nice slide from a great (but scary)

presentation
by T2 partners.

If you go through and apply reasonable loss rates to these categories, it isn't hard to get $3 trillion dollars in total credit losses.
(note: agency double counts prime loans). Maybe half of that is concentrated in US banks. The total capital of the US banking system is roughly $1 trillion which basically makes the banking system insolvent.



HERE is another estimate from Nouriel Roubini.