OK, this is starting to get weird. In the fall of 2007, we estimated that banking losses would be $3 trillion. The math is easy. $20 trillion in peak real estate valuation, half of which was owned by the bank. People with upside-down mortgages would walk away. Those who didn’t would be counteracted by processing costs. A 30% drop in real estate value equates to a $3 trillion banking loss. We later bumped the loss to 35%, or $3.5 trillion.
Back then, Roubini caused gasps when he mentioned the phrase “one trillion dollars”. Goldman Sachs was saying “three hundred billion dollars”.
On Christmas Day (gulp) Roubini uttered the word “two and one half trillion dollars”, and we said:
"We noted that half of the loss went to the banks, and half to home equity loss for homeowners, or a $3.5 trillion banking loss. Roubini will get here eventually. How do I get on TV?"
And today we come upon this:
“Roubini Predicts U.S. Losses May Reach $3.6 Trillion”
This, my friends, is why you should learn to grow potatoes.