Buying time

Morgan Stanley update their economic forecast;

...In our baseline outlook, we still expect that the recession will end late in 2009, followed by a moderate recovery. Initiatives to fix the financial system, coupled with aggressive monetary and fiscal stimulus, remain the key factors promoting the upturn.

...Buying time makes sense as Betsy Graseck, our large-cap bank analyst, believes that the earnings power of the core banking business is sufficient for banks to earn their way out of an $800 billion (pretax, pre-provision, pre-mark-to-market) problem in two to three years. Despite current concerns, the industry has already made good progress on that front.