Roubini Sees Worst Recession in 40 Years, Stock Drop (Update3) Oct. 14 (Bloomberg) — Nouriel Roubini, the professor who predicted the financial crisis in 2006, said the US will suffer its worst recession in 40 years, pouring the stock market lower after it rallied the most in seven decades yesterday. “There are significant downside risks still to the market and the economy,” Roubini, 50, a New York University professor of economics, said in an interview with Bloomberg Box. “We’re going to be surprised by the severity of the recession and the severity of the financial losses.” The economist said the recession will last 18 to 24 months, pushing unemployment to 9 percent, and already depressed home prices will fall another 15 percent. The US government will need to double its buy of bank stakes and break down lenders to eliminate dividends to save them from bankruptcy, Roubini added. Treasury Secretary Henry Paulson said today he plans to use $250 billion of taxpayer funds to buy equity in thousands of financial firms to halt a credit freeze that threatened to drive companies into bankruptcy and eliminate jobs. “This will be the first round of recapitalization of the banks,” Roubini said. “The government has to choose to intervene much more directly in the provision of credit and the management of these companies.” The Standard & Poor’s 500 Index rallied the most since 1933 yesterday, rising 12 percent, on the government plot to buy stakes in banks and a …
What about Steve Keen?
I’ll give you one person who predicted this entire disaster way back in 2001.
Unlike all the “economists” who you listen to who can’t predict one single thing with all their Cobb-Douglas production functions and IS-LM curves, this man knew what was going to happen to the letter.
His name is Peter Schiff, and he is a student of Austrian Economics. Look it up.
The Fantastic Depression happened in the 1920s. Last time I checked, the year is 2008.
It’s a different time with different problems. Bringing up the Fantastic Depression for all your analyses is like a doctor talking about headaches to a patient that has cancer.
“Deflationary spirals” have never been seen in real life. It’s a complete lie.
Deflation is terrible for the US government because it’s $40 trillion in debt. They want inflation because it “cheapens” the debt. To make the citizenry go along with the inflationary destruction of their wealth, they say deflation is terrible.
Deflation means your money is worth MORE. That’s a very excellent thing.
Perhaps you need to Google Deflation? Last time US had it we called it the fantastic depression and it took a fucking world war to restore your health from it. Of course high inflation will becomes a risk again down the road, when it does we can (breathe a sigh of relief and) adjust fiscal policy to counter that. Like we’ve been do (mostly) successfully since the gold standard was dropped.
difference between a excellent economist and a terrible economist Please! *** are you? Can you send me a link to even one legitimate economist who shares your opinion. Clearly you have no bloody clue! The fact is theres much less money flowing in the economy now, not more why? because US banks, (most)companies and consumers are leveraged to the hilt.
Banks will hoard cash till there capital ratios improve, companies will hoard it till their not relying on banks to provide them with cash for their ordinary operations and consumer will be shocked into saving at least some of their income. So if we where to stay on your (the excellent economist) advice and not increase the money supply, very quickly (months) wed find ourselves slipping into a deflationary spiral which is the worst possible outcome.
The difference between a excellent economist and a terrible economist is that the terrible one only looks at the pressing consequences while the excellent one looks at the long-term.
Printing money and debasing a currency always has and always will make inflation. This is the very definition of inflation that is found in the glossary.
A month shortly, deflation is a fact.
IF anyone reading this comment is ***** and bored u should TOTALLY check out my profile and msg me on MSN messenger!! Z
The Fed made this mess, and people are still looking to them for guidance during this crisis. Unbelievable!!!
I disagree. I reckon inflation is inescapable at this point. The amount of money being printed all over the world is unprecedented.
How can anyone know where to invest (meaning personal education, entrepreneurship, money, everything!) when the government constantly changes the rules?
In Soviet America, MONEY SPENDS YOU! VHAT A COUNTRY! (apologies to Y. Smirnoff)
Why work hard, why be reliable, what do you teach your kids?
What a bunch of Bull zszhit!
I admire his analyses, but
NR’s solutions are really incorrect:
This was the problem:
1. Lending to people who should not get loans, which was positive by politicians both Republican and Democratic.
2. Simple credit and money by an artificially low interest rate from the FED.
3. The implicit government guarantee which became explicit from the GSE’s Fannie Mae and Freddie Mac
Deflation at this point is inescapable. More intercession=more problems. See above!
NOT INVESTMENT ADVICE.
The US is in a recession for at least a year…….so….what does Nouriel mean with “The recession train has left the station”?
There is no paradox, moron… you cannot have free-market capitalism with a central bank.
Don’t blame capitalism, blame the central bank.
As always exceptional Info!