Shotguns, Gold Bars and Defunct Banks

This is among the more pessimistic but lucid things you will read in some time — and it comes from a purportedly sophisticated investor — so steel yourself. It is a NY Mag interview with a large, distressed debt investor:

NYM: How are you doing?
V: Since I saw you last, things have deteriorated more than even I could have imagined. We’re invested in virtually all sectors, primarily through debt, so we have pretty good access to management. The color coming from them is mind-bogglingly awful. We need to flush all the banks and start again. I told my wife I’m putting gold bars and shotguns under our bed.
NYM: What’s the least-bad news you’ve heard recently?
V: The only thing anyone on the desk can come up with is the fact that there have been a number of high-grade non-financials who have been able to raise debt in the market. That’s it. GDP is going to be down 10 percent this quarter, is my guess.
NYM: Give me the bad news then.
V: I heard this yesterday: The top five U.K. banks have $10 trillion of assets and their GDP is only $2.13 trillion. The whole country could fall into the ocean. The top five U.S. banks represent only about 60 percent of GDP by comparison. The other thing is a survey that I just read about in the Times. Over six in ten Americans think that someone in their household will lose their job in the next year. That means six in ten people won’t buy anything other than basics. The economy comes to a full halt even worse than now.

More here.

Related posts:

1. German Banks, or Good/Bad/F**ked Bank, Redux
2. U.S. Banks Riskier Than Third-World Countries
3. The Trouble With Limbo for Banks
4. Bear’s Beatdown: A Run on the Non-Banks?
5. Buiter: Create Parallel Banking System; Take Away Bad Banks’ Banking Licenses