BxCapricorn

Troubled Banks in 1991 Were 25 Times Worse Than Now

The last time we met the Professor, he was telling us that if you took away CA, NV, FL, and MI, the housing numbers shown this summer, weren't that bad. Before that, I remember him calculating the World Market capitalization at $63T (back in Dec 2007) and concluding that the $500B subprime write down (turned out it was $1-2T, leveraged ten fold) wouldn't do much to the World's economic growth. It was just this big ol' train that could not be slowed down. We were all making mountains out of molehills. But, like the Professor on Gilligan's Island, he could tell you it's a radio, but you can see that it's really two coconuts cut in half, and that he's really just talking to himself. Now he's been asked by "Drill, Drill, Drill" economic lunatics (like Kudlow) to get out there and try to convince everyone that bank defaults aren't a problem...um...use the sheer number of them compared to other periods of time. Yeah, that's the ticket! So what if they have been propped up by $8T of various loans, programs, capital injections and other shenanigans. Every time you post, I can literally count one Mississippi, two Mississippi, right up to around three months, and then the wheels fall off. Sheila Bair asked for the cash from Paulson because she just saw her troubled bank list START to go parabolic. With the Alt A mortgage refinancings starting to peak right now, just count the number of days that defaults become foreclosures, under various State rules, and this kind of Pollyannish statistical voo-doo will look hilarious, at that future time.