by the end of 2010 the banks’ books will be much cleaner, mainly because the bulk of the losses will have been taken by then. at that point it should be easy for the banks to raise private capital. what’s keeping private capital out of the system right now is fear — people are afraid that losses are going to be much deeper than expected, or people are afraid of a debt deflationary depression.

if we get past that, the banks should be able to raise a couple hundred billion in private capital if necessary, and then they will be well capitalized.

for instance bank of america’s market cap is 80B right now and an unencumbered BAC would be worth probably around 250B. they could easily raise 50B if they could convince people that after the raise their balance sheet would be clean. that will happen if there are no serious negative surprises in the next year or so.

http://www.rgemonitor.com/blog/roubini/256694/ten_reasons_why_the_stress_tests_are_schmess_tests_and_why_the_current_muddle-through_approach_to_the_banking_crisis_may_not_succeed

How did we just go from the something like $2.7 Trillion in US banks losses estimated by Roubini and now the IMF…to $78 Billion in capital needed to withstand a worsening economy per the stress test results????

Oh, on point, I find it interesting that calling the turn is such an obsession in the world. I assume that’s a function of the 24/7 news cycle, that we become more and more involved in minutiae. Did you see the Kentucky Derby? Around the first turn the winner was about 5 lengths behind the field and looked like a nag on the way to the glue factory. Where are we in this race? Not in the homestretch. My guess is somewhere past the first turn but I don’t see us as being very far into the backstretch. There’s a lot of race left.

Can’t imagine new orders for ships are happening.

But in any case, overall Korean exports in both March and April would be a lot weaker if it wasn’t for the “unusual” increase of ship deliveries.