Nouriel Wins Again: Curses!

[swag]

http://krugman.blogs.nytimes.com/2009/02/14/stressed-for-success/

Krugman still in agreement with Nouriel Roubini - we are going to nationalize the shitbanks:

Focus just on the big four money center banks: Citi, B of A, Wells Fargo, JPMorgan. According to this estimate, they need around $450 billion. Meanwhile, their combined market cap is only about $200 billion — and part if not all of that market cap surely represents the “Geithner put,” the hope that stockholders will in effect get a handout from the feds.

Given these numbers, it’s extremely hard to rescue these banks without either (a) giving a HUGE handout to current stockholders or (b) effectively taking ownership on the part of we, the people. Of these, (a) would be politically unacceptable as well as bad policy — but the Obama administration isn’t ready to go for (b), because it’s not in our “culture”.

Hence the perplexity of policy. Our best hope right now is that the “stress test” will make (b) inevitable — that Treasury will declare itself shocked, shocked to find that the banks are in such bad financial shape, leaving government receivership unavoidable.

[dkf]

1. Why is he bunching Wells Fargo and JPM in with Citi and BOA?

Makes me wonder if he knows something we don't or if he is not as up to speed as he ought to be.

[Mike 03]

2. Good question. This gives me the shivers. Not so much J.P, Morgan,

but Wells Fargo for sure.

[dkf]

3. Wells Fargo has the best rating of the big banks. (yeah yeah ratings schmatings)

You are more worried about Wells than JPM?