Could Be Worse

Nouriel Roubini, the pessimist of all pessimists, is even gloomier today about the economic crisis than he had been. He doesn't think the bailout will make one bit of difference. Scary thing is: he predicted everything that's happened so far.

The next step of this panic could be the mother of all bank runs, i.e. a run on the trillion dollar-plus of the cross-border short-term interbank liabilities of the U.S. banking and financial system, as foreign banks start to worry about the safety of their liquid exposures to U.S. financial institutions. A silent cross-border bank run has already started, as foreign banks are worried about the solvency of U.S. banks and are starting to reduce their exposure. And if this run accelerates--as it may now--a total meltdown of the U.S. financial system could occur.

On the bright side, the crisis means we might save on that border fence.