If US joblessness hits 11%, loan losses will be much higher than banks' estimates in stress tests -- Roubini

First Published Thursday, 9 July 2009 from Need to Know News

If US joblessness hits 11% by year's end, then expected loan losses are going to be much higher than the ones banks estimated in recent stress tests, said American economist Nouriel Roubini in an article in his daily RGE Monitor.

"You plug an unemployment rate of 11% in any model of loan losses and recovery rates and you get very ugly losses for subprime, near-prime, prime, home equity loan lines, credit cxards, auto loans, student loans, leverage loans, and commerical loans -- much bigger numbers than what the stress tests projected," he said.

Roubini is predicting the US unemployment rate could reach 10.5% by the end of summer and possibly hit 11% by the end of the year.

The latest US jobs report showed that the unemployment rate rose to 9.5% in June.


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