This morning's globally coordianated rate cut may have temporarily boosted the stock markets (very temporarily, it turned out), but our guest Nouriel Roubini sees more trouble ahead. Specifically, he predicts more U.S. banks failures -- perhaps even a major one.
The past few months support his case, with such stalwarts as Lehman Bros., AIG, Wachovia, and WaMu biting the dust, and in the accompanying video Roubini estimates that "a couple hundred" smaller regional banks are next in line. What about a bigger fish? The NYU Stern School economist and chairman of RGE Monitor cites the technical insolvency of Citigroup in the early '90s -- when the housing market was down a comparatively measly 5% -- as a sign that major financial institutions are increasingly vulnerable.
Wouldn't the U.S. government take just about any step to prevent such a disaster? "Eventually, a government takeover of the biggest bank in the United States is a possibility," Roubini says of Citi, thereby shoring up the economy at the expense of shareholders, creditors, and possibly uninsured depositors -- another argument for his proposal of a blanket guarantee on bank deposits.
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This morning's globally coordianated rate cut may have temporarily boosted the stock markets (very temporarily, it turned out), but our guest Nouriel Roubini sees more trouble ahead. Specifically, he predicts more U.S. banks failures -- perhaps even a major one.
The past few months support his case, with such stalwarts as Lehman Bros., AIG, Wachovia, and WaMu biting the dust, and in the accompanying video Roubini estimates that "a couple hundred" smaller regional banks are next in line. What about a bigger fish? The NYU Stern School economist and chairman of RGE Monitor cites the technical insolvency of Citigroup in the early '90s -- when the housing market was down a comparatively measly 5% -- as a sign that major financial institutions are increasingly vulnerable.
Wouldn't the U.S. government take just about any step to prevent such a disaster? "Eventually, a government takeover of the biggest bank in the United States is a possibility," Roubini says of Citi, thereby shoring up the economy at the expense of shareholders, creditors, and possibly uninsured depositors -- another argument for his proposal of a blanket guarantee on bank deposits.
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