Hussman - The Problem with Financials

"I expect that in the next year ortwo, we will observe at least one quarter, and more likely a full year,in which the entire profit of the U.S. banking sector is consumed byloan losses."

"As of June 30, 2007, the net income of all FDICinsured banking institutions totaled $36.8 billion. At an annual rate,that represents about 2% of all loans outstanding. Meanwhile, netcharge-offs for bad loans were already running at an annual rate ofabout 0.50% in June. That's in a strong economy, before the recentproblems, and loan loss reserves didn't even budge from a 32-year low.Net charge offs could easily quadruple in a mild recession. "

Hussman - The Problem with Financials