No hope for the recession ending in 2009 – Nouriel Roubini
Tuesday, March 10, 2009 8:04The media spends too much time repeating the optimistic outlooks of economists and strategists who’ve been wrong for 3 years. I like to focus on those who clearly saw this recession/depression coming. Among those who correctly predicted this crisis was NYU professor Nouriel Roubini.
Professor Roubini Monday offered the opinion that the US recession could drag on for years without drastic action.
“We are in the 15th month of a recession,” Roubini told CNBC in a live interview.
“Growth is going to be close to zero and unemployment rate well above 10 percent into next year,” he added.
In 2006, Roubini stood before economists at the International Monetary Fund and announced that in the coming months and years the United States was likely to face a housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession.
At the time, the audience was skeptical, even dismissive of the crisis brewing in the United States.
There is “no hope for the recession ending in 2009 and will more than likely last into 2010,” he said.
The risk of a total meltdown has been reversed for now but the economy is going through “a death by a thousand cuts,” Roubini said, adding “most of the US financial institutions are entirely insolvent.”
“The market-friendly view for the banks is nationalization,” said Roubini. “Temporarily take over the banks, clean them up and get them working again.”
The housing market, Roubini said, needs to have “face value reduction of the debt,” similar to a company restructuring in bankruptcy.
The economics professor also expressed doubt that US president Barack Obama’s $800 billion stimulus package can save the economy from collapse.
For one thing, there’s only $200 billion upfront, and half of that is a tax cut, which Roubini calls “a waste of money” that is not going to make a difference.
Despite his gloomy predictions, he said there is still a possibility of “a light at the end of the tunnel,” but that it will get worse before it will get better.
Those who believe in a second half recovery this year “are delusional” he says.
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DV says:
March 10th, 2009 at 9:14 am
He has been a bear for many years – and he was wrong about the recession until late 2008. I predict that it will snow in NYC…so if that doesn’t happen for another 10 months does that make me right next Jan? Just put a 20 period simple moving average on a monthly chart of the S&P and trade accordingly…all else is nonsense.
Kris says:
March 10th, 2009 at 10:27 am
There have been a series of naval scuffles in the South China Seas between the two biggest oil consuming nations on the planet: the U.S.A. and China. Economic distress and competition for resources are leading indicators for territorial conflict and war.
Not taking notice of world events, patterns, and warnings (or frenzied media/market cheerleading) is nonsense.
robertsgt40 says:
March 10th, 2009 at 11:06 am
That light at the end of the tunnel is a train coming the other way
DV says:
March 10th, 2009 at 12:05 pm
Ok Kris – I’m geting in my bunker so i can be safe when we go to war with China this year. In the meantime, when the monthly S&P chart crosses above the 20 SMA let me know so i can reverse my short position…I will already be so profitable that I can buy you a bunker if you need it. Although, if we go to war with China 300 years from now I will support you and say that your prediction was accurate…i learned that from Roubini.
Kris says:
March 10th, 2009 at 12:55 pm
wow DV…i’m touched. You’d really buy me a bunker with all of the profits from your short selling? Can you spare a dime for some groceries too? Hurry though! The national debt is rising faster than you can cash in those treasury bills…………
Palec na pulsie debat « Wolna Amerykanka says:
March 10th, 2009 at 1:04 pm
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DV says:
March 10th, 2009 at 1:58 pm
Short bias ETF’s Kris, not short selling…your bunker will be fully stocked with groceries…keep your eye on those naval scuffles!
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