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The Masked Tulip

America’s Economy Risks Mother Of All Meltdowns

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Recently, Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006. Then , his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”. Here are his 12 steps to financial disaster.

Step one is the worst housing recession in US history. House prices will, he says, fall by 20%-30% from their peak, which would wipe out between $4000bn and $6000bn in household wealth.

Step two would be further losses, beyond the $250bn-$300bn now estimated, for subprime mortgages. Goldman Sachs estimates mortgage losses at $400bn. But if home prices fell by more than 20%, losses would be bigger.

Step three would be big losses on unsecured consumer debt: credit cards, auto loans, student loans and so forth.

Step four would be the downgrading of the monoline insurers. A further $150bn write down of asset-backed securities would then ensue.

Step five would be the meltdown of the commercial property market, while step six would be bankruptcy of a large regional or national bank.

Step seven would be big losses on reckless leveraged buyouts.

Step eight would be a wave of corporate defaults. Such defaults would spread losses in “credit default swaps”, which insure such debt. The losses could be $250bn. Some insurers might go bankrupt.

Step nine would be a meltdown in the “shadow financial system”. Dealing with the distress of hedge funds, special investment vehicles and so forth will be made more difficult by the fact that they have no direct access to lending from central banks.

Step 10 would be a further collapse in stock prices.

Step 11 would be a drying-up of liquidity in a range of financial markets, including interbank and money markets.

Step 12 would be “a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices”.

In all, argues Roubini: “Total losses in the financial system will add up to more than $1000bn and the economic recession will become deeper, more protracted and severe.” This, he suggests, is the “nightmare scenario” keeping Ben Bernanke and colleagues at the US Federal Reserve awake. It explains why, having failed to appreciate the dangers for so long, the Fed has lowered rates by 200 basis points this year. This is insurance against a financial meltdown.

Is this scenario at least plausible? It is.

http://www.businessday.co.za/articles/tops...x?ID=BD4A713391

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This, or indeed, the full Roubini article, was posted here a couple of weeks ago. It was one of those threads which died a death, which seems fairly incredible to me. As far as I can tell, Roubini has been one of the few, "proper economists" who have been calling this show rightly and consistently. He seems to be moving to greater and greater levels of doom, which I think should be worrying us all - we'll have our HPC, but a lot more as well,

Peter.

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This, or indeed, the full Roubini article, was posted here a couple of weeks ago. It was one of those threads which died a death, which seems fairly incredible to me. As far as I can tell, Roubini has been one of the few, "proper economists" who have been calling this show rightly and consistently. He seems to be moving to greater and greater levels of doom, which I think should be worrying us all - we'll have our HPC, but a lot more as well,

Peter.

whats the point of worrying.

this isnt the fault of anyone wanting a hpc, its the fault of mindless, reckless banks and governments,

who harnessed the greed of people in a way so large, as never been seen before.

they used natural greed to mask the swindle and you can be assured that all the major players will be long gone and tucked up before the fall of night.

and thats the problem.

they should be identified and stripped of any wealth.

this reward and the legal ability to keep it, is one of the key motivational factors of unsustainable financial policies.

they will be long gone before the shit hits the fan.

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whats the point of worrying.

I'm a congenital worrier - and I have a partner and two young children.

this isnt the fault of anyone wanting a hpc, its the fault of mindless, reckless banks and governments,

who harnessed the greed of people in a way so large, as never been seen before.

I agree that it's not HPC's fault...but that doesn't help, does it.

they used natural greed to mask the swindle and you can be assured that all the major players will be long gone and tucked up before the fall of night.

and thats the problem.

they should be identified and stripped of any wealth.

this reward and the legal ability to keep it, is one of the key motivational factors of unsustainable financial policies.

they will be long gone before the shit hits the fan.

I'm not holding my breath,

Peter.

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his scenario seems very realistic to me. :huh:

Its really no shock.

A number of us have seen economic meltdown in the USA for a few years.

The austrians have been warning about complete meltdown for a couple of years.

see http://www.moneyfiles.org/

Ron Paul truly is the USA's last chance to keep some semblance of soverignty.

I expect martial law within 2 years and an eventual merger into the NAU and introduction of the amero.

what happens in the Uk is anyones guess. I rather expect some VERY hard times.

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Its really no shock.

A number of us have seen economic meltdown in the USA for a few years.

The austrians have been warning about complete meltdown for a couple of years.

see http://www.moneyfiles.org/

Ron Paul truly is the USA's last chance to keep some semblance of soverignty.

I expect martial law within 2 years and an eventual merger into the NAU and introduction of the amero.

what happens in the Uk is anyones guess. I rather expect some VERY hard times.

Oh for goodness sake, can we lose the melodrama?

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Do you think it is going to be like that 1970s TV series ' Survivor' where we are all running around in polo neck jumpers shooting each other with shotguns and having no sex even though the World is ending?

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Do you think it is going to be like that 1970s TV series ' Survivor' where we are all running around in polo neck jumpers shooting each other with shotguns and having no sex even though the World is ending?

I can go with catastrophic recession and the imminent melt-down of the entire global financial system, leading in turn to a violent anarchy. But polo neck jumpers...? :P

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Anyway, we're ahead of the US for once B) We're already on number six - bankruptcy of major regional or national bank

Yay! We're winning, we're winning, we are the champions of the world....oh wait, that's not good is it? :unsure:

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Anyway, we're ahead of the US for once B) We're already on number six - bankruptcy of major regional or national bank

Yay! We're winning, we're winning, we are the champions of the world....oh wait, that's not good is it? :unsure:

LMAO!

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Do you think it is going to be like that 1970s TV series ' Survivor' where we are all running around in polo neck jumpers shooting each other with shotguns and having no sex even though the World is ending?

I was at school in the late 70's but it was one of those programmes that stays in the memory ,

http://www.youtube.com/watch?v=_-vxxf98r7M

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  • 297 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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