Thursday, Apr 16, 2009
A prominent American risk analyst says optimism about economic recovery is delusional because the ec
Abc: Financial optimism 'delusional', analyst says
The warning comes as Americans turn to their leaders for reassurance that the chill of recession is giving way to the green shoots of recovery.
Posted by chris @ 02:34 AM (483 views) Add Comment
3 Comments
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1. becky said...
Interesting bit at the bottom. So Goldman Sachs are getting paid to underwrite bonds that are already guaranteed by the US Government? That sounds like a bit of a fiddle to me!
2. uncle tom said...
"So Goldman Sachs are getting paid to underwrite bonds that are already guaranteed by the US Government?"
I presume that's a bet against the US govt defaulting, or realising that it has to renege on some of its guarantees.
Neither scenario looks particularly likely in the US, but neither is it likely that your house will burn down - it's a small risk that some investors might want to insure against (although if the US govt went into default, Goldman might not be able to pay the claims..)
I wonder what sort of premium you have to pay to cover the guarantees made by the Irish govt - that would be like insuring a house who's carpets are soaked in petrol..
3. goweresque said...
The more I see the media and the politicians talking up the 'green shoots' and house price recovery' and 'new bull market', the more I'm convinced there's another big downward leg in this recession. Too many people now think this is the bottom. If something comes to spook that belief, we could see a real crisis of confidence, worse than October last year. All it takes is something that doesnt fit with their perception, that shows that this thing is much deeper and damaging than they thought. Likelihood of this occurring? I reckon 50/50.