Meredith Whitney, the analyst who called the financial crisis months in advance, now says banks soon will recover ever so slightly, but that housing has a long way yet to fall — as much as another 30 percent.
Home prices have already come down more than 19 percent over the past 12 months, but Whitney is firmly in the camp calling for a 50 percent peak-to-trough decline.
"Home prices cannot bottom while liquidity is still contracting from the economy," she told CNBC.
Whitney predicted banks would turn the corner soon, but that earnings would not exactly sparkle.
"I think you’ll see a directional turn," Whitney said. "Banks will make a little money, as little as a penny a share, but they won’t lose money."
Investors should reconsider short positions on bank stocks, she said, but also avoid buying into sell-offs.
"The fundamentals are not getting any better but capital ratios should get better," Whitney said.
Meanwhile, time Times of London reports that the International Monetary Fund (IMF) is set to report that toxic debts at the global level could reach $4 trillion, of which $3.1 trillion originated in the United States.
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