Christopher Whalen: "The Real Economy Is Dying," Q4 Will Be A "Bloodbath" (VIDEO)

Christopher Whalen, the no-nonsense managing director of Institutional Risk Analytics, who recently referred to Citigroup "the queen of the zombie dance party" is not one to sugar-coat his forecasts. Whalen sat down with Yahoo Tech Ticker recently to talk about how the banking sector, which has shown some signs of recovery lately, is hoarding cash and why the market may be awaiting a "Bloodbath" in the fourth quarter.

Just as disturbingly, Whalen drew a direct line between banks' struggles and the larger economy. "We've lost the entire non-bank finance sector," Whalen said, adding that the bank's assets have been dropping by $300 billion per quarter this year. "Banks are still building reserves, that's why they're not making loans."

Here's more from Whalen.

"Why is liquidity going into the financial sector? It's because the real economy is dying [and] everyone is fleeing into the stocks and bonds because they're liquid at the moment. That's not a good sign."

Whalen put much of the blame for the economy's condition on the banking sector. He added: "The real economy is shrinking because of a lack of credit."

WATCH the entire interview - and check out Yahoo Tech Ticker here:

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