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The Only Thing We Have To Fear Is Fear Itself

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http://www.bloomberg.com/apps/news?pid=206...id=aERlD846h2XY

Lost ‘Animal Spirits’ May Worsen Economy, Roubini, Shiller Say

By Eric Martin, Thomas R. Keene and Ken Prewitt

July 10 (Bloomberg) -- The worst recession in half a century may be prolonged because consumers see few signs job losses and declines in home prices are ending, economists Nouriel Roubini and Robert Shiller said.

“The fundamental problem, as Franklin Delano Roosevelt said in 1933, is fear,†Shiller, a Yale University professor, said yesterday on Bloomberg Radio’s “Surveillance.†The Great Depression was deepened by a “sense of lost confidence or animal spirits that was a self-fulfilling prophecy. The worry is that we will have the same kind of issue arising again,†he said.

The U.S. needs another stimulus package because President Barack Obama’s initial $787 billion plan hasn’t been implemented fast enough, according to Shiller. Roubini, an economics professor at New York University, said more spending is necessary to avoid stagnation like Japan’s in the 1990s.

Concern the economy isn’t recovering after 18 months of contraction pushed stocks down in the last four weeks after the Standard & Poor’s 500 Index rallied 40 percent since March 9. Roubini and Shiller said a lasting improvement in consumer sentiment is needed before U.S. growth can resume.

In 2006, Roubini predicted the credit crisis that led to $1.5 trillion in losses for financial firms. Shiller is co- creator of the national home-price index that bears his name and the author of the books “Irrational Exuberance†and, with George Akerlof, “Animal Spirits.â€

‘Wave of Defaults’

The economy shrank 5.5 percent in the first quarter and 6.3 percent in the fourth quarter of 2008, the worst six months since 1958, according to data compiled by Bloomberg. Confidence among U.S. consumers slipped unexpectedly in June. The Conference Board’s gauge fell to 49.3 in June from 54.8 in May. That’s up from a record low of 25.3 reached in February.

The savings rate reached 6.9 percent in May, the highest since December 1993, spurring concern that consumer spending will wane. Roubini said it will climb to at least 11 percent.

The recession will likely continue for six months as companies struggle to pay their creditors, he said. The cost of protecting corporate bonds in the U.S. from default jumped to the highest in six weeks on July 8, according to Phoenix Partners Group data.

“The wave of corporate defaults is going to be massive,†Roubini said. “We’re not out of the woods.â€

Both Shiller and Roubini said a lack of regulation allowed banks to take unmanageable risks, leading to the government’s takeover of American International Group Inc. and the collapse of Lehman Brothers Holdings Inc.

Home prices in 10 major U.S. metropolitan areas fell 0.7 percent in April, the least since June 2008, according to a S&P/Case-Shiller home-price index, the latest sign that the worst of the housing slump may be passing. Sales of existing homes increased in April and May, while new construction rose in May from a record low.

“A slowing in the rate of decline is good news, and it suggests that it will continue to slow in coming months,†Shiller said.

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^^^ This is a 50 minute radio programme but it's been filmed as well.

Dispelling "green shoots" myth about 3:30 in. I'll keep listening...

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Still, the radio show isn't a bad find. 50 minutes of Roubini and Schiller. Althogh to be honest - I'm about 30 minutes in and there are no new "huge" revelations.

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http://www.bloomberg.com/apps/news?pid=206...id=aERlD846h2XY

Lost ‘Animal Spirits’ May Worsen Economy, Roubini, Shiller Say

By Eric Martin, Thomas R. Keene and Ken Prewitt

"We are not out of the woods yet," said little bear to the BIG BULL, but sadly Big Bulls' animal spirit had long gone caught up as it was in the hugely inflated bubble created by Berty Blowfish just before he went underwater. Still there was always the Totem bull for people to come to worship in order to perform various rituals and sacrifices , but little bear was off dreaming new dreams with her animal spirit strong in the knowledge that one day the bulls would one day wake up and find their lost spirits last seen heading towards a fairly average property in Aberdeen known for its magical ring-pass-not making it resistant to change or the cataclysmic falls befalling every other property in the kingdom.

Edited by Sybil13

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Think the whole "animal spirits" argument is cobblers, tbh.

Peoples' confidence follows the fundamentals (eventually) rather than leads it.

+1

Insolvency trumps confidence every time

Good article on how confidence may actually be a lagging indicator here

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"We are not out of the woods yet," said little bear to the BIG BULL, but sadly Big Bulls' animal spirit had long gone caught up as it was in the hugely inflated bubble created by Berty Blowfish just before he went underwater. Still there was always the Totem bull for people to come to worship in order to perform various rituals and sacrifices , but little bear was off dreaming new dreams with her animal spirit strong in the knowledge that one day the bulls would one day wake up and find their lost spirits last seen heading towards a fairly average property in Aberdeen known for its magical ring-pass-not making it resistant to change or the cataclysmic falls befalling every other property in the kingdom.

You could be on the gravy train with this Sybil.

Dick Wagner set a tale of lesser substance to music lasting 21 hours,

& the faithful still turn up at the shrine each year to worship the biggest ego in music.

.................................................

MT, that pic is revolting. - (Where is the vomit emoticon on here?)

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You could be on the gravy train with this Sybil.

Dick Wagner set a tale of lesser substance to music lasting 21 hours,

& the faithful still turn up at the shrine each year to worship the biggest ego in music.

.................................................

MT, that pic is revolting. - (Where is the vomit emoticon on here?)

:lol::lol::lol: Where would we be without Bloo and Yoo ooo :) Edited by Sybil13

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