Have we reached the bottom yet? That's a question that people ask me from time to time. I haven't got an answer yet, but today I have some numbers that may give us an idea. And the preliminary verdict is: No!
Why? Because the commercial banking industry in the U.S. is likely to be bankrupt -- by which I mean its liabilities could exceed its assets -- as we approach the bottom. Just how bad will it get? It could see 41 percent of its core capital wiped out by loan losses alone. And when you take into account all the toxic waste and derivatives on the banks' books, its capital looks mighty thin.