The following article appeared in the blog of economist Nouriel Roubini over a week ago (April 10) and, as you can read, already anticipated with reasonable certainty, the IMF's new estimate of 4 trillion dollars in total losses (which, if only for the immense amount of money it we are talking about, it certainly can not exclude a priori a global economic meltdown)
At this point I would like to understand why this information was reported by Corriere.it only today (April 21) and especially why it has been reported exactly two days after Economy Minister Giulio Tremonti has made the following statement: "Finished the nightmare of bags: no longer thinks a collapse of global finance, people have heaved a sigh of relief. " While Marcegaglia, president of Confindustria, weighed in: "crisis, the worst is over in July will be reversed" . And sure enough, after their statements, European stock indexes fell. Now, as the IMF estimated semiapocalittica (who reviewed the data loss from 2.2 to 4 trillion U.S. dollars) was virtually in the public domain for 10 days, there are two possibilities: either the two chief representatives of the Italian economy Two morons or they are liars with a hidden agenda.
is the first part of the article by Roubini translated into Italian:
A year ago, this author had predicted that the losses of financial institutions would be at least 1 trillion dollars and up to 2 trillion dollars. At the time these estimates were considered grossly exaggerated by the naïve optimists had in mind that figures of around 200 billion dollars in losses tied to subprime mortgages. But as we have already pointed out in this forum, the losses have rapidly expanded beyond subprime loans with the U.S. economy is mired in a devastating economic crisis and a bad recession. It was therefore accepted that we would have seen mounting losses on subprime, near prime and prime, real estate and commercial credit cards, auto loans, academic loans, industrial loans and commercial, corporate bonds, sovereign bonds, bonds of state and municipal bonds, in addition to substantial losses on all assets (CDOs, CLOs, ABS and all derivatives of the alphabet).
Then, within a few months, the IMF has come to estimate loss of $ 945 billion, a figure later revised to 1.4 trillion and 2.2 trillion for the beginning of 2009. And at the end of 2008, bank losses had already exceeded 1 trillion (our initial estimate) But if you think that 2.2 trillion was already a huge figure, the new estimates of RGE Monitor published in January 2009 suggested that the total losses loans issued by banks and the consequent drop in market value of their assets would have been negative peak at 3.6 trillion dollars (1.6 trillion to 2 trillion for loans and securities). Banks and brokers Americans are exposed to half this amount, 1.8 trillion dollars. The rest belongs to other financial institutions in the U.S. and abroad. Capital to support the bank was 1.4 Assett tirliardi dollars last fall, leaving the USA discovered 400 billion dollars. So you need additional 1.4 trillion dollars to restore the banks to pre-crisis level and solve the credit crunch by restoring the credit for the private sector.
These figures suggest that the U.S. banking system is almost made insolvent as a whole. This does not mean that all or even most of the institutions are insolvent but many of them it will be - the negative peak - with great shortcomings in the capital. Certainly time will heal many wounds and the cost of borrowing at zero and the growth of net interest margins, banks will be able to rebuilt their capital a little at a time despite the heavy losses due to the repricing of loans and securities. But some institutions are so damaged that fail to recover despite the favorable conditions.
* Note that the difference between the estimate of 3.6 billion to 2.2 billion EJN and the IMF although both have used the same analytical approach is due to the fact that the IMF has looked only at the rate of delinquency on debts while EJN has examined the situation by taking into account the whole scenario of the U.S. economy (decline, decline in house prices, increased unemployment).
But now it has been reported that the IMF will review the estimate of credit losses to 4 trillion dollars. This estimate is 3.1 trillion losses arising from loans and assets of American institutions, while 0.9 trillion losses are originated from European and Asian institutions. Since the estimates of GERD are related to losses arising from American institutions, the comparison should be done on the estimation of 3.6 billion to 3.1 billion EJN and the IMF. At this point, the IMF estimates and RGE are converging towards a similar figure.
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