Originally Posted by WakingTheBull
November 8, 2011
Nouriel Roubini was in fine form yesterday, scaring the bejeezus out of his followers on Twitter by saying that several huge financial institutions could collapse in the blink of an eye like MF Global.
These houses of cards, Roubini tweeted, include:
The problem, as Roubini has consistently warned, is the banks’ dependence on short-term financing to maintain their long-term asset leverage and run their businesses.
What killed MF Global, Lehman Brothers, Bear Stearns, AIG, and other huge financial firms, after all, was the sudden refusal of short-term lenders to continue lending money to the firms.
Every day, the big Wall Street firms borrow tens of billions of dollars in low-cost short-term loans. They then use this money to make long-term bets on assets that