From an April 20 blog which may be accessed in its entirety:

It is said that the International Monetary Fund, which earlier this year revised upward its estimate of bank losses, from $1 trillion to $2.2 trillion, will announce a new estimate of $3.1 trillion for US assets and $0.9 trillion for foreign assets, figures very close to my own.

By this standard, many US and foreign banks are effectively insolvent and will have to be taken over by governments. The credit crunch will last much longer if we keep zombie banks alive despite their massive and continuing losses.

He then notes three reasons why the current rally is a bear market rally:

1.)   Macro-economic indicators will be worse than expected and growth slower to reappear.

2.)   Corporate earnings and profits will not rebound as quickly as the consensus estimate and deflation combined with bond defaults will limit pricing power.

Third, financial shocks will be worse than expected.

At some point, investors will realise that bank losses are massive, and that some banks are insolvent. Deleveraging by highly leveraged firms -- such as hedge funds -- will lead them to sell illiquid assets in illiquid markets. And some emerging market economies -- despite massive IMF support -- will experience a severe financial crisis with contagious effects on other economies.

His conclusion seems to try to avoid being too alarmist, but is tepid at best:

There may be light at the end of the tunnel -- no depression and financial meltdown. But economic recovery everywhere will be weaker and will take longer than expected. The same is true for a sustained recovery of financial markets.  (My bold.)