Roubini Warns Of 'Sovereign' Bank Failure

[Purveyor]

Source: The Age / Bloomberg

February 20, 2009 - 6:31AM

Nouriel Roubini, the New York University professor who predicted the global credit crisis, said a government-backed bank ''may crack'' as officials try to bail out their financial systems.

''The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign,'' Roubini wrote on his Web site today. ''At some point a sovereign bank may crack, in which case the ability of the governments to credibly commit to act as a backstop for the financial system -- including deposit guarantees -- could come unglued.''

Roubini didn't identify any sovereign bank that might run into difficulty.

He also said he sees a 30% chance of an ''L-shaped near-depression'' without ''appropriate and aggressive policy action'' by the US and other major economies to prevent a sovereign bank's failure.

The latest data indicate fourth-quarter gross domestic product in key economies including the US, the euro zone and Japan may be worse than initially reported.

Read more: http://business.theage.com.au/business/world-business/roubini-warns-of-sovereign-bank-failure-20090220-8cs4.html

[GoesTo11]

1. L-shaped depression?

Does that mean everything collapses to zero and stays there?

[freemarketer6]

2. Not to zero, but it reaches a low and stays at that low for a long

long time, like what happened to Japan in the ninties.

[GoesTo11]

3. That's better than our I shaped depression

That flat part of the L will feel like up.

[adamuu]

7. *spits out his milk*

HAH!
yeah... good thing it won't be a lower-case l.
phew

[Marie26]

4. Which soveriegn? Isn't Iceland already close? nt

[Dr.Phool]

5. Iceland is already gone. Ireland may be next.

Easter Europe is in major trouble, as is Russia.

[Purveyor]

6. Russia is reporting that they are in relatively good shape. Here is a article from yesterday...

MOSCOW, February 17 (RIA Novosti) - Russian Prime Minister Vladimir Putin said Tuesday at an economic conference that the country's Reserve Fund will be sufficient to balance this year's and future budgets.

The Reserve Fund was designed to cushion the federal budget against a fall in oil prices. Finance Minister Alexei Kudrin has said there would be extensive use of reserve funds to cover the 2009 budget deficit, which he said could total at least 6% of GDP.

"The deficit will be covered from our own resources: activities on the domestic loan market and the Reserve Fund, which currently stands at 4.8 trillion rubles <$132.6 billion>. These funds will be enough to balance the budget in this and subsequent years," Putin said.

According to the parameters of the federal budget for 2009 approved last year, expenditures were to total 9.024 trillion rubles ($248.4 billion at current exchange rates) and revenues slightly over 10 trillion rubles ($275.3 billion). These figures will be adjusted.

Putin also said the government would include the cost of implementing its anti-crisis program in the revised budget.

He said that although budget revenues would be cut, the government would not refrain from implementing key social and investment programs.

"In addition, new expenses will be fixed in the budget as part of anti-crisis measures," he said.

RIA NOVOSTI: http://en.rian.ru/business/20090217/120191393.html

[Alcibiades]

9. Former communist more fiscally responsible than Republicans

Balanced budgets? What are those?

[Johnyawl]

11. Yeah, Russia is such an open, transparent government...

...we should believe everything Putin tells us. Him and his buddy 'W' are two of a kind. Only Putin is less stupid, and 'W' is less evil.

[InkAddict]

8. Don't forget Switzerland - I read it in SMW

See what happens when countries are "neutral" about crimes like tax evasion and money laundering through off-shore accounts from around the world.

[truebrit71]

17. The Swiss problems stem from loans to Eastern Yurrup...

...should have stuck to chocolates, fondue and over-priced watches... ;-)

[ooglymoogly]

10. Gee who could have known that NAFTA , a criminal government and a crooked financial system

working in tandem to fleece the common man could have brought us to this. Hmmmmmmmmmm

[Hardrada]

12. Don't forget Poland!

[unkachuck]

13. here's the rub....

"...'appropriate and aggressive policy action' by the US and other major economies to prevent a sovereign bank's failure."

....example, the European public sector isn't rushing to inject borrowed 'recovery' money into their private sector to cover fraud, swindle and debt made in Washington and New York....

....and how happy are Americans going to be when they see their borrow domestic 'recovery' money being free-traded away from our economy by European and Asian corporations?

....unless everybody is on the same stimulus, recovery and bank bailout page the countries that are doing more will gravitate to protectionism out of necessity leaving the less able nations to fend for themselves....

"The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign,..."

....who has the reserves or cushion for debt to bail-out the nations of the world?....the New New World Order is coming....

[Blackhatjack]

14. People smarter than me have said the US Heavyweights were insolvent before the bailout...

What has been filtered out of all 'news reporting'(and I use that designation loosely in describing what we see and hear in the US) is that esoteric financial derivative instruments engulfed all of the heavyweights, and the balance sheets put forth for public consumption were based on valuations that were nothing short of fantasy.

The receipt of billions of dollars meant that hedge funds didn't have to be closed out right away, and the whole credit swaps charade was not exposed.

I am afraid we are at the point that keeping the curtain from being pulled back is more important than the billions of dollars we are throwing around to make sure that does not happen.

I doubt we will every 'see' what the true state of affairs 'was' and 'is today.'

[mackerel]

15. Lehrer Newshour had Dallas Salisbury on tonght

from choosetosave.org and he says that salaries and hourly pay won't return for another 20 years.

If we all lower our debt now and buy absolutely only what we need and with cash we can get things under control and in 15 years actually we will increase the value of hour pay.

The more Americans use credit the less our actual earnings are worth.

[Zorro]

16. Take your pick

Citi, BofA, Chase.

I think Citi is the unnamed sovereign bank.

[xchrom]

18. recommend