Christopher Whalen: "The Real Economy Is Dying," Q4 Will Be A "Bloodbath" (VIDEO)

Christopher Whalen, the no-nonsense managing director of Institutional Risk Analytics, who recently referred to Citigroup "the queen of the zombie dance party" is not one to sugar-coat his forecasts. Whalen sat down with Yahoo Tech Ticker recently to talk about how the banking sector, which has shown some signs of recovery lately, is hoarding cash and why the market may be awaiting a "Bloodbath" in the fourth quarter.

Just as disturbingly, Whalen drew a direct line between banks' struggles and the larger economy. "We've lost the entire non-bank finance sector," Whalen said, adding that the bank's assets have been dropping by $300 billion per quarter this year. "Banks are still building reserves, that's why they're not making loans."

Here's more from Whalen.

"Why is liquidity going into the financial sector? It's because the real economy is dying [and] everyone is fleeing into the stocks and bonds because they're liquid at the moment. That's not a good sign."

Whalen put much of the blame for the economy's condition on the banking sector. He added: "The real economy is shrinking because of a lack of credit."

WATCH the entire interview - and check out Yahoo Tech Ticker here:

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Comments

[batmancw]

Of course, it's far more important for the Congress and White House to spend time attacking Hannity, Beck and Limbaugh than actually DO something constructive about averting the coming second crash.
Isn't it interesting that all 3 of those guys would agree with Whalen? Hmmmmmm...

[4TJefferson]

Yada. Yada. Yada. Like people aren't having babies anymore? Like 90% of people aren't working anymore? Like roads don't need fixing anymore? Like people don't need gas or bread anymore? Go back to your bomb shelter, no news here.

[sposton]

Phantom "economy" still rules under Obama. Making money out of thin air is still the predominant "economic" activity. This phantom economy is like a vampire sucking blood from real economy, you know, the one that actually produces things and its related services. This has been going on for decades and there is hardly any more blood left in the real economy. Now the phantom economy figured out how to suck blood from us through our own government. What is next?

Obama has failed in his most important test, to act decisively and with sufficient medicine to actually save us from the phantom economy vampire. It is his most major failure and it constitutes the single greatest missed opportunities for our country. It is as if one could have prevented the damage from the greatest earthquake ever recorded; Obama chose not to prevent the future disaster by cozying up to the vampire. And we will pay for this one, if not now, tomorrow then ten, twelve years from now.

[Lego87]

Doesn't it worry anyone that it seems all these people that called this long before it happens like this guy, Peter Schiff, Ron Paul etc..... are all still saying we are basically still screwed because nothing has changed? Where as the people who has helped us get into this mess are telling us the recession is over while we still are seeing record unemployment, national debt increases, and deficit spending continues,

[batmancw]

It worries me that SO FEW people who have the power to make changes seem to be listening to them. So, to me, that means they either know what's coming and are enriching themselves in one last blowout, or they're in denial of reality.

[MTLAUREL]

in walks China......

[RobinL]

Oh yes, this is all so very helpful. With the media advertising doomdayers like this guy we will NEVER have recovery.

[watchTVgetSTUPID]

Kill the messenger?

As long as Obama keeps relying on the same Wall Street Cabal that created the crisis, there will be no change

[LunaPark]

Yes, we need to hear more lies, like "mission accomplished." The truth is overrated anyway.

[Gernuser]

Congratulations to to Obama for winning the Nobel Peace Prize

If you like finance & econ news you'll like: http://pie.im/af30

Obama needs to carry out actual heath care & financial reform. Needs to get things done instead of just talking and planning.

[desertman]

The big question is how will policymakers respond to a sluggish to nonexistent rebound in hiring? The economically illiterate, and those with preconceived "big government" agendas, will use any crisis as an excuse to expand government. You’ll be ahead of the game if you realize -- as many in the media and academia clearly do not -- that the government has no resources. It’ll take money out of one of your pockets, skim some off for its cronies, and expect you to be grateful when they put some of it -- debased by the Fed’s inflation, of course -- back into your other pocket.

[HalfPastLate]

The true nature of the biggest scam in history should be coming to full light this quarter.

SubPrime was only the beginning, what about all those equity loans lent to prime borrowers that are now laid-off and won't be able to keep up with the payment schedule? Add into this that not $1.00 was spent buying a "Toxic Asset" back with TARP Money,

Say Hello to indentured servitude!

[Cinch]

"Say Hello to indentured servitude!"

Not necessary so. If people and businesses are strategic defaulting on loans, they won't be held responsible for said debts. Of course there are consequences to creditors and debtors alike.

[ElementalPraxis]

"not $1.00 was spent buying a "Toxic Asset" back with TARP Money"

LOL... guess they couldn't call it the Troubled Bank Stock Purchase Program, because it would have had BS right in the middle of its acronym.

[IntelligenceQuantifier]

I have many friends with mortgages. All of them have 700+ credit scores and not one has gotten any form of assistance with their loans. And just like another who posted, all of them have stopped paying on their homes and could care less about a credit score.

[Organic-Guy]

You're so right. Worrying about one's credit score now is such a waste of time. So many people are in such bad shape through no fault of their own it's impossible to get their credit score fixed before they die. Either we invent a new way to value people or this country is going to become a gigantic ghetto.

[RJII]

My score remained over 750 for a decade. However, I have to never live by or worry about that FICO cr@p again. It does not determine my savings, earnings, and real wealth. If I need a bogus credit score for someting, it means I can't afford it or should not be doing business with the entity. More people, including employers and businesses, should drop it too.

[RJII]

oops..."However, I hope to never live by..."

[Cinch]

It is peculiar to me to see many people view their lives through a score. And to think, I thought grade school was over once you finished.

[Gernuser]

More work needs ot be done

Good articles: http://pie.im/af30

[MyTalkRadiou]

Obama needs to do actual reform instead of just talk & plan

good articles: http://br.st/tU

~~

[desertman]

That's all that seems to happen though.

[batmancw]

But, he's so handsome and well-spoken and liked by the world. C'mon, you don't actually want him to DO something, do you?

[leevntheus]

My wife and I are counting the days until our two beater cars are paid off. We've cut up credit cards and closed all accounts. We stopped paying the bank for our house over a year ago and are moving to a cheap rental. Our business runs on CASH and that's what we use to pay for everything. I could give a rip about credit. It is the stinkiest most rigged system mankind has ever known. It is slavery without the whips and chains. We are both finishing our advanced degrees in two years and then selling our business to pay off the student loans. THEN....

WE ARE LEAVING THIS STINK HOLE OF A COUNTRY WITH OUR CHILDREN TO FORGE A NEW FUTURE IN A COUNTRY THAT IS NOT CORRUPTED BY OUTRIGHT GREED AND AVARICE.

We will not waste one moment looking back.....

This country is about to become Germany circa 1930...

get out while you still CAN

[Bush-Rolled]

Where you goin'? Just asking.

[leevntheus]

Brazil...Holland....and just fer kicks since wifee has loads of letters of credit import export accounting w/ china......China!

[gnomic]

Good luck finding that country -- They are all corrupt in some way.

[leevntheus]

of course yea....but this one is THE most....so....

[IntelligenceQuantifier]

Whenever you get there, please promise us Huffsters you'll write.

Orvoir!

[RJII]

amen. living on credit is no good.

[desertman]

Don't let the screen door hit you on the way out.

[leevntheus]

believe me...it won't even get a whiff of us...have fun with your sewer

[LeeCalif]

Tomorrrow's Friday.

Bank Closing Day. I'll guess four will be closed.

[whatsittake]

I am surprised to see and hear the subject video shown in a near mainstream venue. Too bad the Armageddon the good folks who yearn for the end times keep looking for is only going to happen to the US. And maybe their good friends the Brits. One poster here (there may have been others, I didn't read everything) picked up on a very real phenomena that supports the direction the gentleman discussed. That is that, henceforth, oil will not, or not necessarily, be paid for in $US. Anybody want to think very long and hard about what that means?

You can try to shout down those who predict a financial default of the US economy, but they are either right or they are wrong. Your shouting means nothing except that you are afraid they are right, and you have no idea how to protect yourself. I'm not certain how to completely protect myself, but I have a few ideas. And, no, I don't mean with weapons unless you are a member of an army the size of Europe, because the Texas brag will disappear like match in a hurricane.

[sonnybrakes]

My bank refused to grant me a line of credit, but that's alright because I still have my guitar.

[desertman]

Are you a good risk?

[batmancw]

Thanks for the chuckle sonny. For those of us who aren't in denial of reality, they're becoming few and far between. It enrages me,and should ALL Americans, that OUR & future generation's tax money is being used to fund the destruction of our economy and way of life.