Smart people are the best.

Economists Nouriel Roubini and Matthew Richardson published an opinion piece in the Wall Street Journal on Tuesday, arguing that ultimately, the government will have to stop subsidizing the banks. They aren’t buying the line that the banks are all solvent — as their evidence they cite a much-discussed International Monetary Fund study on estimated bank losses on U.S. loans and securities. The IMF puts the total figure of such losses at $2.7 trillion.

Our estimates … are even higher, at $3.6 trillion, implying that the financial system is currently near insolvency in the aggregate. With the U.S. banks and broker-dealers accounting for more than half these losses there is a huge disconnect between these estimated losses and the regulators’ conclusions.

Here’s a short answer to the question of whether or not banks are “solvent”: they are not. Because they have amassed their fortunes on money that never existed. I don’t know why this even needs to be studied. They thought they had billions of dollars that they didn’t really have. If you trade real money for fake money, then you do not have any money. Question … answered!

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