Roubini Says The Banking System Is "Effectively Insolvent"

Noted bear, NYU Professor, Nouriel Roubini, said at a conference financial losses from the credit crisis may reach as high as $3.6 trillion, saying the banking system is "effectively insolvent."

"The problems of Citi, Bank of America and others suggest the system is bankrupt. In Europe, it’s the same thing," Roubini said.

According to data from Bloomberg, losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. mortgage market collapsed in 2007.

Roubini told Bloomberg, President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration.

Other predictions from Ruobini include that he thinks oil prices will continue to trade between $30 to $40 a barrel all year. Roubini had this to say about commodities: "I see commodities falling overall another 15-20%. This outlook for commodity prices is beneficial for oil importers, it’s going to imply that economic recovery might occur faster, but from the point of view of oil exporters, this will be very negative."

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