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There is not necessarily a one-to-one correlation in NPA's and capitalization, though. Arguably, Japan's biggest drag was the Postal Bank, which was mired in a fat but rigid labor system. The financial sector in the US is not intertwined with unions and infrastructure to the same extent as Japan, and much of the labor supply in US construction was illegal. According to your graph, the US has returned to the pre-bubble mark (roughly 110) in three years (4Q07-4Q10), rather than Japan's seven years (1H91-1H99). The slope of the US line as of the end of 2010 is much steeper than your extension of it. In fact, the current slope looks to hit bottom about 2018, where your chart of property overhang from 2010 predicts the property bubble finally will shrivel.

Already, the modest Obama infrastructure program is running out, and put-backs are starting to hit banks. The Bear only blew up in March of 2008, the first round of federal intervention came in October 2008, and it all finally hit the courts in 2010. We already are working through crappy real estate at twice the speed of Japan - or more. As you show, New York still dwells in the bubble, and DC/Baltimore continue to have soldiers moving in, roads being built, etc. National capitals always are bubble towns, and Wall Street is doing God's work for the Feds on Wall Street. However, price-to-rent ratio and declining prices suggest that the other shoe will drop on Southern California and the Pacific Northwest this year. However, Citi has foreign units, and the other big banks have units that can be consolidated or sold.

This is where US banking differs markedly from Asian and European players. If one of those big state-owned banks busts in China, there will be blood, so to speak. If BofA lays off another ten thousand employees, there will be suffering at the Gap but Wal-Mart will gain greeters. I have worked for minimum wage and have also been laid off, so I certainly do not mean to make light of it. However, the likely high unemployment for the next couple of years is likely to translate into rage at the polls, which well could translate into reforms that look more like Reagan than Roosevelt. Firefighters and teachers already are losing pensions in all of this, but several of the big banks could make it out of this looking like Ford and GM. Morgan Stanley and Goldman Sachs may look more like Chrysler, but that is why you look in your crystal ball and publish a blog for a living.