Nouriel Roubini, global macro Uber-Bear, has posted an interesting commentary on his blog - “The delusional complacency that the “worst is behind us” is rapidly melting away…and the risk of another run against systemically important broker dealers“ which I am excerpting below with my comments in red:
Sphere: Related ContentThe deleveraging process for the financial system has barely started as most of the writedowns have been for subprime mortgages; the writedowns and/or provisioning for the additional losses have barely started. Thus, hundreds of banks in the U.S. are at risk of collapse. The typical small U.S. Bank (with assets less of $4 billion has 67% of its assets related to real estate; for large banks the figure is 48%. Thus, hundreds of small banks will go belly up as the typical local bank financed the housing, the commercial real estate, the retail boom, the office building of communities where housing is now going bust. Even large regional banks massively exposed to real estate in California, Arizona, Nevada, Florida and other states with a housing boom and now bust will go belly up.