Roubini Now Sees "big Risk" Of A Double-dip : Report

[MOP]

Roubini Sees Big 'Double-Dip' Risk: Report

Published: Monday, 24 Aug 2009 | 12:20 AM ET Text Size By: Reuters

Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the

world's recent financial troubles, sees a "big risk" of a double-dip recession, according to an opinion piece posted on the Financial Times' Web site on Sunday.

Roubini, a professor at New York University's Stern School of Business, said it appears the global economy will bottom out in the second half of this year, and that U.S. and western

European economies will likely experience "anemic" and "below trend" growth for at least a couple of years.

Yet he warned that policymakers face a "damned if they do and damned if they don't" conundrum in trying to unwind their massive fiscal and monetary stimuli to keep the global economy from toppling into a depression.

He said that if policymakers try to fight rising budget deficits by raising taxes and cutting spending, they could undermine any recovery.

On the other hand, he said if they maintain large deficits, worries about excessive inflation will grow, causing bond yields and borrowing rates to rise and perhaps choking off economic growth.

Roubini said another reason to worry is that energy, food and oil prices are rising faster than fundamentals warrant, and could be driven higher by speculation or if excessive liquidity

creates artificially high demand.

He said the global economy "could not withstand another contractionary shock" if speculation drives oil rapidly toward $100 per barrel. U.S. crude oil futures traded Friday at about $73.83.

Roubini said the anemic growth he expects would follow a couple of quarters of rapid growth, as inventories and production levels recover from near-depression levels.

http://www.cnbc.com/id/32535028

Swizzle sticks at the ready!

[interestrateripoff]

Won't below trend growth itself cause it's own set of problems? Doesn't that imply unemployment is going to continue to increase causing even more defaults.

Anemic growth is really bad news. Didn't Bernanke state that the US needs 2.5% growth just to avoid job losses?

It appears that the entire system is screwed.

[CokeSnortingTory]

The fact that oil has settled in the $70/bbl range during a "recession" phase tells you everything you need to know about where things are going.

[Hip to be bear]

http://www.cnbc.com/id/32535028

Swizzle sticks at the ready!

To get a double dip or W shaped recession you need a decent 'up' in the middle. All QE seems to be doing is blowing up a bubble in the FTSE and allowing HP to level off. Meanwhile the jobless total rises and the debt builds.

I see more of a staircase shaped recession, and we are currently sitting on the little landing half way down.

[Bloo Loo]

amazing.

trillions in stimulus and the problem....debt...remains. and reducing the debt is going to be painful...only now they have even more.

whodathunkit.

[interestrateripoff]

The FT Thread on this, merge?

amazing.

trillions in stimulus and the problem....debt...remains. and reducing the debt is going to be painful...only now they have even more.

whodathunkit.

That's because debt is wealth, didn't you attend the seminar on how to continually rolling over debt leads to increased profit?

Paying off debt was just creating dead money, increasing your debt allowed you to profit more.

I thought you ran a business? You don't appear to be up to speed on how maximise your profits.

I'd suggest attending the next groupthink seminar so you can improve your business skills and increase your debt ratio to become the wealth individual this nation needs.

More debtors are needed to improve our wealth status.

[Bloo Loo]

The FT Thread on this, merge?

That's because debt is wealth, didn't you attend the seminar on how to continually rolling over debt leads to increased profit?

Paying off debt was just creating dead money, increasing your debt allowed you to profit more.

I thought you ran a business? You don't appear to be up to speed on how maximise your profits.

I'd suggest attending the next groupthink seminar so you can improve your business skills and increase your debt ratio to become the wealth individual this nation needs.

More debtors are needed to improve our wealth status.

REPORTING FOR RE-EDUCATION, STATION 6ALPHA. </nulab zombie>

[Bloo Loo]

To get a double dip or W shaped recession you need a decent 'up' in the middle. All QE seems to be doing is blowing up a bubble in the FTSE and allowing HP to level off. Meanwhile the jobless total rises and the debt builds.

I see more of a staircase shaped recession, and we are currently sitting on the little landing half way down.

an Escalession?

[Darkman]

Yet he warned that policymakers face a "damned if they do and damned if they don't" conundrum in trying to unwind their massive fiscal and monetary stimuli to keep the global economy from toppling into a depression.

He said that if policymakers try to fight rising budget deficits by raising taxes and cutting spending, they could undermine any recovery.

On the other hand, he said if they maintain large deficits, worries about excessive inflation will grow, causing bond yields and borrowing rates to rise and perhaps choking off economic growth.

So basically there is no recovery, and no room to manoeuvre either. The stimulus was a waste of money.

[interestrateripoff]

So basically there is no recovery, and no room to manoeuvre either. The stimulus was a waste of money.

Bankruptcy or debt jubilee appear the only credible solutions.

However using either of those will be to admit the frauds committed by our political elites.

Guess it will be a global police state then.

[Bloo Loo]

Bankruptcy or debt jubilee appear the only credible solutions.

However using either of those will be to admit the frauds committed by our political elites.

Guess it will be a global police state then.

Admit? they will admit nothing. it was outside their control...they have done all they could. sorry about the martial law, but in our weakened state, terrists will take advantage...we must be vigilant.

[azogar]

i wish Roubini would make up his mind

[roman holiday]

So basically there is no recovery, and no room to manoeuvre either. The stimulus was a waste of money.

Many commentators [among them central bankers] criticized Japan's QE policy. They reasoned it would be better to purge the banks and the economy. Good hard-headed advice, yet thrown out the window when it came our turn to face a deflationary contraction.

Some commentator's still consider Japan's strategy to have been a failure in that it has created zombie banks and an economy with no growth in GDP. Of course they are completely missing the point, the Japanese policy of government spending helped sustain their GDP at current levels, without which it would have completely crashed causing social havoc.

I wonder if the UK and the US [both post-welfare states and a lot less cohesive politically] can hope for such a fortunate outcome.

Edited August 24, 2009 by roman holiday

[Neverland]

Many commentators [among them central bankers] criticized Japan's QE policy. They reasoned it would be better to purge the banks and the economy. Good hard-headed advice, yet thrown out the window when it came our turn to face a deflationary contraction.

Some commentator's still consider Japan's strategy to have been a failure in that it has created zombie banks and an economy with no growth in GDP. Of course they are completely missing the point, the Japanese policy of government spending helped sustain their GDP at current levels, without which it would have completely crashed causing social havoc.

I wonder if the UK and the US [both post-welfare states and a lot less cohesive politically] can hope for such a fortunate outcome.

Remind me, didnt Japanese house and property prices get shredded by deflation?

[MOP]

i wish Roubini would make up his mind

?

I don't know why you say that TBH. Roubini has been pretty clear about all this:

1 - Current "technical" recession will end in Q3/Q4 2009 due to positive growth (mostly from stimulus).

2 - A second "technical" recession will probably begin in 2010 due to the reasons he gives in the OP.

The message is very clear IMO.

Edited August 24, 2009 by MOP

[Joey Buttafueco Jr]

?

I don't know why you say that TBH. Roubini has been pretty clear about all this:

1 - Current "technical" recession will end in Q3/Q4 2009 due to positive growth (mostly from stimulus).

2 - A second "technical" recession will probably begin in 2010 due to the reasons he gives in the OP.

The message is very clear IMO.

Some would call him a charlatan

http://wallstcheatsheet.com/economy/is-nou...rophet/?p=1321/

[MOP]

Some would call him a charlatan

http://wallstcheatsheet.com/economy/is-nou...rophet/?p=1321/

Not very revealing TBH.

Roubini might not have got the sequence of events bang on, but he did make a number of very good calls before the crisis began. How many other "experts" managed to do this ? Not very many.

I think everyone was caught out by the sheer size of the stimulus measures (Roubini included) to prop this thing up. The stimulus has changed a single recession into a double dip IMO.

Edited August 24, 2009 by MOP

[azogar]

?

I don't know why you say that TBH. Roubini has been pretty clear about all this:

1 - Current "technical" recession will end in Q3/Q4 2009 due to positive growth (mostly from stimulus).

2 - A second "technical" recession will probably begin in 2010 due to the reasons he gives in the OP.

The message is very clear IMO.

U or W?

Roubini Project Syndicate Op-Ed: A Phantom Economic Recovery

Nouriel Roubini | Aug 16, 2009

Where is the US and global economy headed? Last year, there were two sides to the debate. One camp argued that the recession in the US would be V-shaped—short and shallow. It would last only eight months, like the two previous recessions of 1990-1991 and 2001, and the world would decouple from the US contraction.

Others, including me, argued that given the excesses of private sector leverage (in households, financial institutions and corporate firms), this would be a U-shaped recession—long and deep. It would last about 24 months, and the world would not decouple from the US contraction.

Today, 20 months into the US recession—a recession that became global in the summer of 2008 with a massive recoupling—the V-shaped decoupling view is out the window. This is the worst US and global recession in 60 years. If the US recession were—as is most likely—to be over at the end of the year, it will have been three times as long and about fives times as deep—in terms of the cumulative decline in output—as the previous two.

Today’s consensus among economists is that the recession is already over, that the US and global economy will rapidly return to growth and that there is no risk of a relapse. Unfortunately, this new consensus could be as wrong now as the defenders of the V-shaped scenario were for the past three years.

[MOP]

U or W?

Roubini Project Syndicate Op-Ed: A Phantom Economic Recovery

Nouriel Roubini | Aug 16, 2009

Where is the US and global economy headed? Last year, there were two sides to the debate. One camp argued that the recession in the US would be V-shaped—short and shallow. It would last only eight months, like the two previous recessions of 1990-1991 and 2001, and the world would decouple from the US contraction.

Others, including me, argued that given the excesses of private sector leverage (in households, financial institutions and corporate firms), this would be a U-shaped recession—long and deep. It would last about 24 months, and the world would not decouple from the US contraction.

Today, 20 months into the US recession—a recession that became global in the summer of 2008 with a massive recoupling—the V-shaped decoupling view is out the window. This is the worst US and global recession in 60 years. If the US recession were—as is most likely—to be over at the end of the year, it will have been three times as long and about fives times as deep—in terms of the cumulative decline in output—as the previous two.

Today’s consensus among economists is that the recession is already over, that the US and global economy will rapidly return to growth and that there is no risk of a relapse. Unfortunately, this new consensus could be as wrong now as the defenders of the V-shaped scenario were for the past three years.

See my above post.

The sheer size of the stimulus changes the U into a W. I don't think any of us could have expected governments to take such unprecedented measures of this magnitude. Would you have expected it this time last year?

[azogar]

See my above post.

The sheer size of the stimulus changes the U into a W. I don't think any of us could have expected governments to take such unprecedented measures of this magnitude. Would you have expected it this time last year?

maybe not, but kudos to jim puplava who called the 'w' back in april

[SleepyHead]

testing to see if this works!

nope didn't work.

here's a link instead http://www.cnbc.com/id/15840232?video=1224816097&play=1

Anyone know how to embed a clip in this forum?

Edited August 24, 2009 by Khayl

[shedfish]

i like Roubini - he's the counterpoint to the 6.5 billion kids in the back of the clown car shouting 'are we there yet'

re. this equity 'rebound', i was reading on ZH that 30% of all the volume over the last few months has been from just 5 companies - Fannie, Freddie, AIG, Citi, and CIT

familiar names with something in common.... makes you wonder who's buying

[MOP]

i like Roubini - he's the counterpoint to the 6.5 billion kids in the back of the clown car shouting 'are we there yet'

re. this equity 'rebound', i was reading on ZH that 30% of all the volume over the last few months has been from just 5 companies - Fannie, Freddie, AIG, Citi, and CIT

familiar names with something in common.... makes you wonder who's buying

The five most bankrupt institutions on the face of the planet! WTF?

[interestrateripoff]

i like Roubini - he's the counterpoint to the 6.5 billion kids in the back of the clown car shouting 'are we there yet'

re. this equity 'rebound', i was reading on ZH that 30% of all the volume over the last few months has been from just 5 companies - Fannie, Freddie, AIG, Citi, and CIT

familiar names with something in common.... makes you wonder who's buying

O god that's all we need.

Any traders on here want to take my order of some of these wonder shares?

[interestrateripoff]

Not very revealing TBH.

Roubini might not have got the sequence of events bang on, but he did make a number of very good calls before the crisis began. How many other "experts" managed to do this ? Not very many.

I think everyone was caught out by the sheer size of the stimulus measures (Roubini included) to prop this thing up. The stimulus has changed a single recession into a double dip IMO.

Didn't Roubini call for a massive stimulus? I thought he's also praised the packages as needed?

Although I'm not sure on which comments he had which head on.