Top 10 Economic Predictions & Forecasters for 2008
Saturday, November 29, 2008 15:19We’re naming names! Below are our picks for the best economic forecasters for 2008.
#1 Nouriel Roubini
Professor of Economics at New York University
Chairman, RGE Moniter
Website: www.rgemonitor.com
In his words: (2007) “With residential investment still in free fall, commercial real estate still doing fine until recently but now showing signs of strain, capex spending by the corporate sectors still being sluggish, it is enough for consumption to slowdown to 1% SAAR or less to trigger an economy wide recession… a sharp slowdown in consumption growth will be the last straw that will trigger an economy wide recession. Expect Q4 growth to be 1% or below and this growth further to accelerate into negative territory by H1 of 2008.”
Books:
Bailouts or Bail-Ins: Responding to Financial Crises in Emerging Markets
Video: (2007: Be patient through the cheerleading pundits)
#2 Jeremy Grantham
Chairman of the Board of Grantham Mayo Van Otterloo
Co-founder of GMO
Website: www.gmo.com
In his own words (2007): “In five years, I expect that at least one major bank (broadly defined) will have failed and that up to half the hedge funds and a substantial percentage of the private equity firms in existence today will have simply ceased to exist…The bursting of this bubble will be across all countries and all assets.”
#3 Peter Schiff
President of Euro Pacific Capital Inc
Website: www.europac.net
In his own words (2007): “(The US Economy) has too much consumption and borrowing and not enough production and savings. The American consumer is going to stop consuming and start rebuilding his savings. When you have an economy with 70% consumption (of GDP), you cant address those imbalances without a recession…When the stock market comes down and the real estate bubble burst, all that phony wealth is going to evaporate.”
Books:
Crash Proof: How to Profit From the Coming Economic Collapse
The Little Book of Bull Moves in Bear Markets: How to Keep Your Portfolio Up When the Market is Down
Video:
#4 Robert Prechter
Founder of Elliott Wave International
Website: www.elliotwave.com
In His Words (2007): “The overvaluation of stocks is more extreme than the 1929 high…Which tells me the next bear market will be the biggest in many years, probably since 1929-32.”
Books:
Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression
Video:
#5 Jim Rogers
Co-founder of the Quantum Fund.
Creator of the Rogers International Commodities Index (RICI).
Website: www.jimrogers.com
In His Words (2007): ‘Financial companies, stock brokers, investment banks -- I am short. I am short financial services companies, mainly in America. I am short (U.S. home funding firm) Fannie Mae (FNM.N:)…The problems with the housing market have a long way to go in the United States. Probably more so than in any other country. But the excesses in the world economy are on Wall Street”
Books:
A Bull in China: Investing Profitably in the World’s Greatest Market
Video:
#6 Marc Faber
Founder of Marc Faber Limited & The Gloom, Boom & Doom Newsletter
Website: www.gloomboomdoom.com
In His Words (2007): “The S&P has a very good chance to decline by 20-30% and the emerging economy stock markets could drop by 40%”
Books:
Tomorrow’s Gold: Asia’s age of discovery
#7 Gerald Celente
Founder of The Trends Research Institute
Website: www.trendsresearch.com
In His Words (2007): “We are going to see economic times the likes of which no living person has seen…The Panic of 2008 will lead to a lower U.S. standard of living…America is heading for an economic 9-11”
Video:
#8 Joseph Stiglitz
Professor at Columbia University
Winner of the Nobel Memorial Prize in Economic Sciences (2001)
Website: www2.gsb.columbia.edu/faculty/jstiglitz
In His Words (2007): ” Just as the collapse of the real-estate bubble was predictable, so are its consequences: Housing starts and sales of existing homes are down, and housing inventories are up. By some reckonings, more than two-thirds of the increase in output and employment over the past six years has been real estate-related, reflecting both new housing and households borrowing against their homes to support a consumption binge. The housing bubble induced Americans to live beyond their means — net savings has been negative for the past couple of years. With this engine of growth turned off, it is hard to see how the American economy will not suffer from a slowdown.”
Books:
The Three Trillion Dollar War: The True Cost of the Iraq Conflict
Making Globalization Work
#9 David Rosenberg
Chief North American economist at Merrill Lynch
Website: www.ml.com
In his words (2007): “The US consumer is on the precipice of experiencing its first recessionary phase since 1991 -- the last time we had the combination of high, punishing energy prices; weakening employment conditions; real estate deflation and tightening credit conditions. We reiterate that real estate deflations are unique and have never ended well for the consumer, the credit market or the economy. We can identify only five periods post WWII when the real value of housing assets turned negative on a year-on-year basis. All of these time periods inevitably included a consumer downturn. Maybe it will be different this time, but we fail to see why”
#10 Robert Schiller
Professor of Economics at Yale University.
Founder and chief economist of MacroMarkets LLC.
Website: www.econ.yale.edu/~shiller/
In His Words (2007): “Willingness to support the market after a sudden drop may be declining. The “buy-on-dips stock market confidence index” that we compile at the Yale School of Management has been falling gradually since 2001, and has fallen especially far lately..a.n underlying sensitivity to price drops, which could fuel a succession of downward price changes, amplifying public concerns about problems in the economy and heralding a profound change in investor sentiment.
Books:
Irrational Exuberance
The Subprime Solution: How Today’s Global Financial Crisis Happened, and What to Do about It
Related posts:
Jing Miao says:
December 2nd, 2008 at 1:54 pm
One thing that puzzles me is, the Fed has printed so much money and has injected so much liquidity into the economy, but why do we still see liquidity crunch? What is the mechanism behind the scene that shifts the world’s worries dramatically from inflation to deflation?
chartingstocks1 says:
December 2nd, 2008 at 3:22 pm
Thanks for the question Jing. I think we still see liquidity problems because the vast amounts of capital has gone into the hands of only a few. Further, even with the new capital injections, large banks are not willing to assume the same risk as they did in 2005 and so we’re seeing the contraction in credit expansion (liquidity).
We’ve experienced the largest credit bubble that has ever been see throughout any nation in history. The US was consuming more than any nation in history (72% of GDP). It wasn’t sustainable and we’re going to have to adjust.
To answer the second part of your question – Yes, the focus was on inflation until mid 2007 as the weak dollar drove up the price of food, oil, rent, etc. Though there were deflationary pressures building with the decline of home values. The declining asset prices have not spread through to the equity and credit markets. The greatest source of household wealth in the US was first the home, and second the retirement accounts. Almost half of that wealth has disappeared and so the spiral begins. People will spend less. Companies will spend less. Jobs will be lost, etc.
I do think that we’re going to see major problems in the US dollar – the effect of printing $8 trillion. People bought dollars recently because they were deleveraging there foreign assets(selling), not because of fundamentals.
I suppose that the end game scenario would be continued deflation in asset prices and rampant inflation in food, gas, etc. That would wipe out the middle class. I hope that we aren’t going down that path.
Tell Shishang I said hi.