Jump to content
House Price Crash Forum
Sign in to follow this  
MOP

Roubini: Those Are Yellow Weeds, Not Green Shoots

Recommended Posts

Roubini: Those Are Yellow Weeds, Not Green Shoots

Wall Street Journal

June 9, 2009, 9:40 AM ET

First, employment is still falling in the U.S. and other economies. This will be bad news for consumption and the size of bank losses.

Second, this is a crisis of solvency, not just liquidity, but true deleveraging has not really started, because private losses and debts of households, financial institutions, and even corporations are not being reduced, but rather socialized and put on government balance sheets. Lack of deleveraging will limit the ability of banks to lend, households to spend, and firms to invest.

Third, in countries running current-account deficits, consumers need to cut spending and save much more for many years. Shopped out, savings-less, and debt-burdened consumers have been hit by a wealth shock (falling home prices and stock markets), rising debt-service ratios, and falling incomes and employment.

Fourth, the financial system — despite the policy backstop — is severely damaged. So the credit crunch will not ease quickly.

Fifth, weak profitability, owing to high debts and default risk, low economic — and thus revenue — growth, and persistent deflationary pressure on companies’ margins, will continue to constrain firms’ willingness to produce, hire workers, and invest.

Sixth, rising government debt ratios will eventually lead to increases in real interest rates that may crowd out private spending and even lead to sovereign refinancing risk.

Seventh, monetization of fiscal deficits is not inflationary in the short run… slack product and labor markets imply massive deflationary forces. But if central banks don’t find a clear exit strategy from policies that double or triple the monetary base, eventually either goods-price inflation or another dangerous asset and credit bubble (or both) will ensue.

Eighth, some emerging-market economies with weaker economic fundamentals may not be able to avoid a severe financial crisis, despite massive IMF support.

Finally, the reduction of global imbalances implies that the current-account deficits of profligate economies (the U.S. and other Anglo-Saxon countries) will narrow the current-account surpluses of over-saving countries (China and other emerging markets, Germany, and Japan). But if domestic demand does not grow fast enough in surplus countries, the resulting lack of global demand relative to supply — or, equivalently, the excess of global savings relative to investment spending — will lead to a weaker recovery in global growth, with most economies growing far more slowly than their potential.

So, green shoots of stabilization may be replaced by yellow weeds of stagnation if several medium-term factors constrain the global economy’s ability to return to sustained growth. Unless these structural weaknesses are resolved, the global economy may grow in 2010-2011, but at an anemic rate.

http://blogs.wsj.com/economics/2009/06/09/...t-green-shoots/

Share this post


Link to post
Share on other sites
Roubini isn't really being on message with this one.

This is the trouble I have with him he appears to lack the guts to stay constantly what he believes.

Once invited inside the big tent you start to smell of farts.

Share this post


Link to post
Share on other sites
Roubini isn't really being on message with this one.

This is the trouble I have with him he appears to lack the guts to stay constantly what he believes.

His has done the job that he intended to do which was to make doom and gloom predictions and get in front of every camera in sight as quick as posible to promote his revenue generating web site.

This was just a money making exercise for Roubini.

Share this post


Link to post
Share on other sites
This was just a money making exercise for Roubini.

Unless I'm very much mistaken, he got an awful lot of it right. I for one hope he does very well out of it.

Share this post


Link to post
Share on other sites

Roubini is a legend!

Probabaly more for the GEI guys as its pretty heavy, but when I signed up for his website (approx Jul 07 surprisingly!) - RGE Monitor, it was opened up for free due to the crisis and the amount of traffic.

I still now receive daily his top 5 roundup by email - again deep but very interesting

Share this post


Link to post
Share on other sites
Unless I'm very much mistaken, he got an awful lot of it right. I for one hope he does very well out of it.

I agree he did in predicting the crisis. He was spot on. Then he became a media star and it seems to have gone to his head and he got more and more sensationalist.

His predicitions in January that all US banks are zombie banks on life support and the majority would fail and the US taxpayer would lose all the TARP money. What happened 10 large US banks paid back TARP in full plus the interest payments yesterday. Then he predicted this is a suckers rally and for people to go short the markets about 1500 points ago. Yet another sensationalist call (I remember another famouse commentator on here got slaughtered for making rash calls on the stock market).

The pessimists will never see the light at the end of the tunnel.

Share this post


Link to post
Share on other sites
I agree he did in predicting the crisis. He was spot on. Then he became a media star and it seems to have gone to his head and he got more and more sensationalist.

His predicitions in January that all US banks are zombie banks on life support and the majority would fail and the US taxpayer would lose all the TARP money. What happened 10 large US banks paid back TARP in full plus the interest payments yesterday. Then he predicted this is a suckers rally and for people to go short the markets about 1500 points ago. Yet another sensationalist call (I remember another famouse commentator on here got slaughtered for making rash calls on the stock market).

The pessimists will never see the light at the end of the tunnel.

well, atleast normal service has resumed. Commentators can start laughing at roubini again for being a doom monger [as before the GFC] while they talk of the treasury and BoE turning profits from the bailouts and with the economy on the road to doing just fine thankyou very much.

Clearly all we needed was confidence.....confidence players being the flip side to the pessimists. Both suffer from a same blind spot affliction in my view. And it's not as if you don't have a VI yourself in talking up your part of the economy is it ralph ?

Share this post


Link to post
Share on other sites
His predicitions in January that all US banks are zombie banks on life support and the majority would fail and the US taxpayer would lose all the TARP money. What happened 10 large US banks paid back TARP in full plus the interest payments yesterday.

Shame on Roubini for not spotting that the banks would pay back the Government with the government's own money via the AIG conduit. Fool of a Took.

Edited by Alan B'Stard MP

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   295 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.