tb1975

U.S. Dollar Strength and Implications for Gold

I meant half = $1.8 trillion, not $1.8 billion

U.S. Dollar Strength and Implications for Gold

The author writes yet another flagrant misquote of Roubini. Roubini DID NOT say that the US banks are in a $3.6 Trillion hole. He said they were on the hook for half ($1.8 billion) of the total $3.6 Trillion. Here is the text from Roubini's website:

"Jan 20 Roubini/Parisi: Assuming a further 20% fall in house prices and unemployment peaking at 9%, we project total loan losses to amount to $1.6T out of $12.4T loans outstanding. Of these $1.6T loan losses, about $1.1T accrue to U.S. banks and brokers.
# Mark-to-market prices as of December imply around $2T in writedowns on $10.8T U.S. originated securities outstanding. Flow of funds data show that 40% of U.S. originated securities are held abroad. U.S. banks' share of writedowns is about 30-35%, or $600-700bn for U.S. banks/brokers according to weights in IMF GFSR October 2008, table 1.1
# Total loan and securities losses amount to $3.6T, half of which accrue to the U.S. banking system, or $1.8T."
from rgemonitor.com

If you are going to quote (or cite) somebody, do it right. While this still makes for an insolvent banking system ($1.8 T in liabilities vs. $1.4 T in assets), doesn't this make the case for more Fed fiat money and monetization of that debt?

Sounds good for gold to me. I'll stick with my gold that was up 4% last year and holding steady this year versus any other investment. The author can keep buying dollars- see you at the finish line.