Roubini catches up with Rasputin

So, I see that Roubini has FINALLY ratched up his prediction of $3 trillion in credit losses, taking several months to creep from his original $1 trillion prognostication.

Here is a quote from a Bloomberg article regarding Roub's rant:

"Roubini said total credit losses resulting from the meltdown of the subprime mortgage market will be 'closer to $3 trillion,' up from his previous estimate of $1 trillion to $2 trillion."

Also, on another issue which I had repeatedly addressed, the actual number has finally been released as to the size of the "Hanktator Act". Now, imagine my (complete lack of) surprise when it was revealed that instead of the $700 billion number drilled into the heads of the populace by the purveyors of propaganda in the mainstream media (and even echoed by many posters on this board), the TRUE amount is:

OVER TWO TRILLION FIATSCOS!

...and here is a link to the New York Times article that states that number, which verified what I have been screaming for over a month it would be:

It's about time these guys caught up to ranting, raving Rasputin.

..and here is the actual passage from the article regarding the true amount:

"All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks."


(Ras): Whocoodanode that any of this was going to take place?: The total amount of debt and derivatives collapse, and the governments response?

Well, I'll tell you who knew:

You did.

Because on August 12th, 2007--a full fourteen months ago--I posted a missive on this very board regarding the amount of debt and derivatives losses that I expected we would witness and also I offered my opinion on what the results of these losses would be as well as how the official sector might respond to the debt/derivatives collapse.

And how close were my predictions?

Well, let's see. Below, please find an excerpt from that post.

To wit:


What will happen next:

Okay, so now “the cat is outta the bag” and even the slow, slovenly, central bankers and governments know we have a genuine, first-class, up-in-your face liquidity crisis going on. And the numbers are HUGE!!! Huge as in at least:

-$3 trillion in soon-to-be-defaulted home debt, owed by bankrupt sheeple who are sitting in:

-Somewhere between 7 million and 10 million soon-to-be empty homes dumped back on the already over-satured housing market.

-Trillions more of MBS/CDO/Squared/Cubed/CDS/other derivatives that are more intertwined and inter-tangled than an Appalachian family, and are stuffed into literally every corner of the world's financial system, will collapse in a series of cascading cross defaults. Which means:

-Thousands of failed hedge funds, mutual funds, money market funds and other players will be wiped out and will close down, leave their investors with nothing.

-Dozens of major investment banks will be mortally wounded.

-Banks will fail.

-Not to mention a general stock and (other than sovereign, for now) bond market crisis and possible collapse.

…all leading to a global systemic crisis.

(Ras): So, while Ben Bernanke, Hank Paulson and most mainstream economists and pundits were stating that "Sub prime is contained", I predicted the amount of outright debt default AND the result to the financial system.

Over a year ago.

Next, let's take a look at what I predicted regarding how the official sector would respond to the epic collapse that I had accurately foretold above:

So, what do the CBs and governments do?

Simple.

They “monetize”.

Now, before the two remaining deflationists in the world jump up and say “NO WAY!!!”, please allow me to softly remind them to sit down, look at that one-third-of-a-trillion dollar TOMO-Tofu the CBs just swallowed, and then reconsider this before making fools of themselves and continuing to insist that the CBs are just gonna sit back and idly watch the world's financial system collapse..

To be fair, though, to the die-hard deflationists, I will modify the above statement to:

They will ATTEMPT to “monetize”.

And they will ALSO do each and every thing I have been predicting for months on this very board, some of which are happening right now:

-Debt forbearance (which the FDIC woman said to Kudlow was now called “Restructuring” on his show on Thursday). And not just homedebtors either, but rather ALL debtors whether they be corporate, financial, or otherwise.

-Continued TOMOs and even POMOs from the CB crowd. Hey, it's ONLY electronic fiat credits, right?

-Government-sponsored programs to nationalize entire industries and segments of the economies. “RTC II, the Sequel” comes right to mind for the homedebting sheeple, and “Super Duper Ginnie” comes to mind to buy up ALL the outstanding MBS, should the Fed not want to be coerced into taking them on their balance sheet.

-Of course, lots and lots of “jawboning” to keep the sheeps complacent. However, if this should fail and the sheeps start a bank run, then another 1930's-style “bank holiday” will certainly be implemented. And it will ALSO include stopping capital flight, so don't get cute and think you will just move your electronic fiat credits to some off-shore haven. Or even keep them there if they are there now. I won't even get into what will happen to the Gold Hoarding Seditionist crowd. But trust me, it will make Gitmo look like a five-star hotel stay!!! Ultimately, full martial law wouldn't surprise me. But then again, I'm a raving paranoic, you know…

(Ras): Indeed, every single prediction I made regarding the response by TPTB has come to pass--in spades. In fact, they have even exceeded my own expectations in terms of size, speed and scope of their collective response by basically just taking over the entire WORLD'S financial system.

So, who should you have believed?

TPTB, or some anonymous, paranoid, ranting, raving poster on an anonymous chatboard?

Heh. I'll let you decide.

And you don't wanna know what's coming next.
.