That was the opinion of economist Nouriel Roubini, of RGE Monitor, who was one of the first people to predict the housing crisis, speaking to "Squawk Box Europe" this morning.
Expected losses of about $2 trillion exceed bank capital of about $1.5 trillion, Roubini said.
Roubini had earlier said that total financial system losses could hit $3.6 trillion.
And "schemes" to just buy so-called toxic assets may not work, because the "risk is it's going to take too much time to resolve the problem," he added.
Instead Sweden's plan of nationalizing all insolvent banks, cleaning them up and then selling off the good assets to the private sector could be a better option, he said.
The pessimism is not unusual for the economists nicknamed "Dr. Doom."
But we'll see if that mood be reflected by the rest of the participants at WEF.
Maybe a "Fantastic Four" of optimism will arrive to save the event from the rule of Doom.
Chat at early participant registration indicated cautious optimism for President Barack Obama's stimulus bill.
But that was the same thing I heard last year about the Bush stimulus.
The event's barely started, but the world's best minds in business and government are already out and about. Here's Sir Martin Sorrell of WPP on his way into a dinner he hosted Tuesday evening. He's got a warm hat left over from the Inauguration last week.
It is the tail end of this journalist's trek to WEF in Davos.
While the calls for spending restraint seem to be echoed by PR departments there was no shortage of cars meeting attendees at the Zurich airport to drive them to the mountain resort. Almost none, that I could tell, were schlepping their bags on the first part of a three-train journey.
I'm sure a few opted for the 30-minute helicopter ride ... and I have no knee-jerk opposition to that.
These are chief executives of international companies and elected officials. Maybe their time is worth a little more than journalists or others. Hopefully they have better things to do instead of sitting across from me on the train and watch my beer when I head to the bathroom.
For my part, the train journey does have something special besides scenery. It has a 'Heart of Darkness' quality, especially the last leg that snakes through the mountains like a river heading to a legendary place of wealth. (Who will be this year's Col. Kurtz?)
And it gives me time to reflect on what I learned from last year: The key is preparation.
Clothing: Last year (my first WEF) I thought I needed to dress for the big occasion. I pretty much froze.
This year my outfit includes Frye boots shipped direct from the US with steel toes that set off metal detectors before I walk through them, thermal underwear and socks, and a snowboard jacket.
In Davos the press badge makes the journalist, not the clothing.
This extends to hair and beard, which I've been growing to face the elements after last year's big grooming left my ears numb. I may look like Willie Nelson (especially with the boots) but I can stay warm on the 50 runs a day between the Congress Center, where almost everything takes place, and CNBC HQ.
Food: I have tried to pack as much home-cooked healthy food into my diet since for the next four days I will subsist entirely on pizza, water and beer.
Gadgets: My use of a digital recorder didn't help conversation and was shunned for all but the most formal interviews.
This year's gadget is a windproof lighter. Lots of the most influential people in the world smoke and they are more talkative if you are the only one who can light their last cigarette before they face a three-hour session on the return of Keynesian strategy.
"It is a wonderful opportunity for policy makers, for public and private to get together in one location and really talk and discuss what we can do, not just on a national basis but on an international global basis," Robert Greifeld, CEO of Nasdaq-OMX Group, said ahead of WEF.
Citigroup is taking a hint from George Soros, who we mentioned in an earlier post , flew *commercial* to Davos!
In that earlier post, I said Soros was a breath of fresh air, especially considering that Citi would be taking that fancy new jet delivery.
But Citi wants to be like George! A statement today: "Citi has no intent to take delivery of any new aircraft."
So I take it back. Citi is a breath of fresh air too--sort of.
Ahead of the World Economic Forum in Davos, Kris Gopalakrishnan, CEO of Infosys, considers what the main issues addressed at the conference will be and how everyone stands to benefit from the conference.
Government leaders, not commercial bankers, will dominate the stage at this year's annual meeting of the World Economic forum in Davos, Switzerland. But policy experts say they'll have to do more than just show up.
The conversations on the ground in Davos, Switzerland are likely to pick up where they left off at the 2008 World Economic Forum’s annual meeting: how did we get here?
Financial markets will dominate the talk in the panels and in the hallways, much to the chagrin of those who felt that last year's WEF focused too much on banks and not enough on health and social issues.
But it's hard to imagine any other topic generating buzz when the situation has moved from a subprime-related crisis to what many are calling the biggest system-wide meltdown since the Great Depression.
Last year, delegates and VIPs worried about waking up to headlines about more writedowns. This year, it's not out of the realm of possibility that all UK banks could be nationalized by the time the meetings are over.
And given the enormity of the problem, organizers and attendees are already working to shift the image of the event as one one of lavish parties at an exclusive ski resort.
"I'm sure there will be a different tone this year and a sense that we need to get down to work," WEF spokesman Mark Adams told the Associated Press. "There are 230 working sessions and that's what people are coming for."
That's encouraging given how tone-deaf executives have been about expenditures while asking for government money. I'll certainly be expecting to glimpse a CEO sitting back with me and other journalists in economy class when I fly to and from the event.
And the flight won't even be full, given the number of people backing out of the event and avoiding the trap of being linked with the luxury elite altogether.
Former Merrill Lynch CEO John Thain is a prime example. Last week, Thain was still scheduled to show up at WEF and participate in a panel entitled "Scenarios for the Future of the Global Financial System."
Now he won't attend and is better known for a decorating spree than anything else he did at Merrill Lynch.
Despite his position as one of the elite at Wall Street, he was just as blindsided by the enormity of the crisis as anyone else, judging by the interview he gave to CNBC at Davos last year.
"We don't need more capital and we're now going to focus on our business," he said in January 2008.
What a difference a year makes.