Yes, 600 mid-sized banks would fail the stress test!  That's a lot of banks.  And the biggest problem is commercial real estate... which is the next piece of the bailout puzzle.  How long are we going to throw money at these black holes?  The most inefficient parts of our economy?  Why don't we let it get worse on its own before it gets better... let the free market work itself out.

Read more here.

"We're now in Barack Obama's world where money goes into the most inefficient parts of the economy and we're bailing everyone out," says Daviowitz, who opposes bailouts for banks and the automakers. "The bailout money is in the sewer and gone."

This outlook is based on the following main points:

• Unemployment - unemployment rates are rising into double digits... and there's millions more that are "underemployed" in jobs paying half as much as their previous.  Consumer spending accounts for about 70% of economic activity and Americans aren't spending like they used to.
• Housing - The $8 trillion negative wealth effect of housing means more Americans will default on mortgages... as well as student loans and auto loans and credit card debt and any other kind of loan they managed to get.
• Commercial Real Estate - More consumer loan defaults will hit banks and commercial real estate is also headed for a crash... remember the recent bankruptcy of General Growth Properties?  This is a huge deal.  

General Growth Properties Inc (GGP) filed for Chapter 11 Bankruptcy today.  This is further evidence that commercial real estate is finally going to get hit hard, just like the banks and homebuilders.  Retailers have been struggling for months and they're finally starting to default on their lease agreements. 

The economic crisis has been slow to hit retail, hotels, and office buildings but reality is finally setting in... without the ability to refinance major debt that's due there's no way for commercial real estate companies to get out of this crisis unscathed.  Welcome to the domino party. 

This is just the beginning of another bubble poised to burst.  Read more here.