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Dr. Realist (f/k/a Doom) Talks Double Dip With The FT
Roubini's latest media appearance, and now that the spectre of a double dip has fully arisen there are quite a few of them, is with the FT's James Blitz in which the NYU professor does a quick 5 minute summary of what he sees as the main threats to the US economy, among which are a 40%+ chance of a double dip, a sub 1% GDP growth in H2 2010, the disappearance of all stimulus pushes (and the conversion of the fiscal stimulus from a tailwind to a headwind), an awful job market, bigger bank losses, declining home prices, a drop in the stock market, widening spreads, a feedback loop from stock markets into the economy, and much more. We are happy the professor has revised his call from a few months back seeing virtually no chance of a double dip. As to policy, Roubini thinks the US has run out of policy bullets on both the monetary and fiscal side: he is sure the Fed will do more QE, but it will be impotent as there is already over $1 trillion in excess reserves (of course, it simply means excess reserves will be $2 trillion, $3 trillion... etc. And IF the economy picks up, this money will hit broad money. But no, aside from that, there is no threat of inflation. Because the Fed is fully prepared to absorb $3 trillion in excess money....). As to Europe, Roubini thinks austerity will also result in a disaster, first for the periphery and then for Germany, so basically damned if you do and damned if you don't vis-a-vis stimulating, which is precisely what we have been saying for over a year: the central banks have boxed themselves in a corner from which there is no escaping, regardless of what they do. Lastly, on Asia, and specifically China, Roubini notes the obvious that even the world's most overheating economy is faced with so many problems that it can only do what the US has been doing so well to date: kick the can down the road.
Full FT Interview after the jump:
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His mood seems to have gotten darker.
Marshall_Mannerheim aka Jim Cramer: ...so I'm about to have sex with this women see but I get down there see and I've noticed there are two holes real close together see so zero hedge, I ask you, what should I do? Anyone?
what a showman. where has he been? 40%? wow, he is really bold.
40% prob. of a double dip in 2011
but 100% prob of a double dip before end 2012
There is absolutely not an epsilon chance that Bernanke will be capable of causing the growth of private credit. For that, he would have to commit to at least $20 to $25 trillion in QE, a portion of which would go to private deleveraging sufficient to cause new growth of private credit, but the other portion would go to expenditure and asset purchases, and we'd have an immediate hyperinflationary collapse.
We've never left the depression anyway.
That is a turnoff to the chicks in the Hamptons. So much for the parties.
what a showman. where has he been? 40%? wow, he is really bold.
We are happy the professor has revised his call from a few months back seeing virtually no chance of a double dip
Just for curiosity (hey I'm new here so just freely junk me:), why does ZH want the double dip to happen? To prove that they were right, or are there more deep meanings behind this desire? What is it that we want? Anyone?
In 2 words, HELL NO!
Its going to hurt everyone. Unfortunately, the Rubicon was crossed some years ago, and because nobody wants to face reality, the debt hole dug out by Keynesian fanatics only gets deeper and deeper. The pain would be much less if all unpayable debt was allowed to be defaulted in the first place, instead of papering it over.
Its more like, 'We told you so!'
Don't like double dip, need to work with reality in order to best position oneself...
I agree . . . none of us WANT a double dip. Some of us, though, feel that there is some serious pain that will be required to have any hope of getting things back on firm ground, and the longer we delay it, the worse it is going to be.
I don't this ZH wan'ts the double dip or anything else to happen. They simply tell the story with details the main stream media 'mistakenly' leaves out.
NOBODY here "WANTS" a double dip, it is simply the liars in the Corps and goobermint are simply not acknowledging there is a problem with the economy.
So please stop stying that we "want" this tohappen. IT is simply a case that we need to take our medicine, and the sooner it is done, the sooner we will get back to sound economic fundamentals and principals. Remember those novel topics?
Thanks. I do agree that the current policies just get US deeper to the swamp.
But the question is, what medicine would help in case if and when the current policies fail?
Austerity? Gold-backed currency? Government debt default? End of central banks? Piece of land, guns and canned food?
current policies are failing... best advice is from GL's article on hyperinflation: be prepared to buy when blood is running in the streets...
P.S. prepared to buy implies, in GL's scenario, that you own PM's...
Hulk,
Or as Richard Russell say's,"It's about how many ounces of Gold you end up with".
This will determine your life most likely for the rest of it, and maybe even your families.
When the music stops,they have already sent in the Clowns.
"This will determine your life most likely for the rest of it, and maybe even your families" first and foremost in my head Doszap. has been for years. Our failure to deal realistically with PO is what originally got me started...I remember those gas lines in the 70's all too well.
"Want" it to happen vs. "Think" it will happen. Some of us who are short the market may cheer lead a little too much on really bad news (seems that mere bad news is good for the market). To imply we want or wish for a severe economic depression is a bit of a stretch.
I have no Cloward/Piven agenda to crash the "system", so it can be rebuilt into some socialist utopia pipe dream. What we have (a boom/bust Kleptocracy) isn't working, and I am trying to prepare for a range of possibilities in my life and investments. A double dip would is a much better than a fall into the abyss (but some are preparing for the abyss just in case).
I think the bottom line is that the nominal "lifestyles" enjoyed by most people are based on a false perception of wealth that was created by unsustainable easy/unwarranted credit. We have to find what a realistic lifestyle is, and reset expectations. Hopefully a realistic lifestyle would be that most people stay warm at night, enjoy some degree of safety, and don't go hungry. Perhaps we don't all drive 40K SUV's have granite countertops, unlimited cell phone plans for every member of the family, personal trainers, fancy vacations, premium cable TV, and so forth. I don't know what a sustainable average lifestyle is, but I know it is much less than what most have chosen. I for one am eager to learn what the new normal will be.
Fortunately, my family was subsistence farmers and therefore I have seen what a nominal lifestyle entails. Still hate drinking out of Jelly jars though! Threads are hard to create a proper seal against...
I think people will be amazed how easy it is to not buy a new car every three years, to cook their own meals at home almost every night, clean their own houses, etc. You can entertain yourself with Netflix for $10 a month and so on.
Don't forget a sauna.
...and I want my jacuzzi back, life without it is unbearable
end fractional reserve banking
The American Economic Plan is the only way out.
http://en.wikipedia.org/wiki/American_System_(economic_plan)
Did the US have in the past 30-40 years sound economic fundamentals or just sounder ones than we currently employ?
I don't believe we ever had a golden age of perfect economic fundamentals just periods where we followed them a bit better.
Right now we have about 50 years worth of obstructions to better economic fundamentals that are keeping us from changing much. I don't see anyone in power trying to chip away at these obstructions in any meaningful way. The reason we aren't trying to remove these obstructions is the fact we have several generations of people who rely on and protect them because they have a vested interest in keeping them in place.(Due to either what they were taught or what they have money invested in)
The US has not had "sound economic fundamentals" since the early 1960's. Those fundamentals included:
A Progressive Tax Policy
Minimal Govt Deficits
A Heavily Regulated Financial Sector
A Reasonable Level of Income/Wealth Equality
Today we are so far removed from "sound economic fundamentals" that it highly unlikely that we will be able to return there absent a complete collapse.
When has the USA ever *not* had a progressive tax policy? US tax revenues are more dependent on the top 1% than ever before.
a Progressive Tax Policy... so you believe that the fix for our economy is the Federal Government stealing private property for the purposes of wealth redistribution in order to punish productivity and encourage dependency...
I guess you forgot one. From each according to his means, to each according to his needs..
The wealth equality in the 60s was more due to labor being much more valuable, the post world war II boom was a one time event that will never return.
World War III boom.
the sooner it happens, the sooner we can get back to normal. All this extend and pretent is just an illusion, sound and fury, signifying nothing.
Normal, is from this point foward, only to be found in Websters, or Wikipedia.
I have "normal" on my washing machine.
Want it to happen? ..no , not in a million years..I'm scared to death of what I'm seeing in the stats..I have never wished to be
more wrong..ever..but then I think..hmm..2400 pages of new health care regulations(oops..I meant "reform")..2300 pages of finacial regulation(again..my bad.."reform") and tax increases in the midst of an economy on government life suppport..and me having a IQ in atleast the double digits gets a little concerned
its not a matter of what anyone wants. Keep reading, you have allot to learn.
Love ya, Spitzer. A lot is two words, however.
Marshall, I think it has to do with the fact that the Government nor the FED has done anything to rescue the middle class.
They rescued Wall Street and pushed the Market were it is today to help the Bankers and the Wall Street Brokers. I think Main Street thinks that the Bankers should be suffering with them. Instead they give themselves Billions in Bonuses and thumb their noses at those that are suffering from their wrongdoing. Yet, they are profiting from their wrongdoing and the victoms the Middle Class are paying for their wrongs.
It is like someone ran over you with their car and you were paralized for life and the Court Ruled that you needed to pay the Driver of the car that paralized you a Million Dollars.
Marshall,
You are missing the point. ZH does not want a double dip, however, we (the ZH community at large) simply realize given the state of affairs that it is literally unavoidable. Frankly, I for one, would like to get on with it so we can focus on how to get out of this economic state rather than just listen to every politician and commentator tell us everything is really great. The faster we acknowledge the problems, the faster we can focus on a viable long term solution.
Speak for yourself, amigo. I want a double dip. I want a collapse. I'm old and life is boring. Excitement is the word of the day. I've got a streak of revenge a mile wide. Paid a lot of (mandated) dues to a system that was stealing from the cookie jar, then took off with the jar. Had I not paid those dues they would have taken everything I own by force of the gun and imprisonment. And look what they did with the money! Spent it on wars, the "winning" of which would not have improved my life nor liberty. In fact, the net to me was less of both. They offered my money to the highest bidder for votes. I'll not wrap my desire for Armageddon in the cloak of the "science" of economics and how Keynesianism doesn't work. Nothing works when the system is corrupt from the top down.
Rocky,
I would say careful what you wish for but we both know what is coming and wishes will not affect it, one way or another. I agree with you, the game is over, period.
Bernanke and company remind me of the old nursery rhyme, Humpty Dumpty. They are trying to resurrect the old economy (Keynesian fraud) but alas it is too late.
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king's horses and all the king's men,
Couldn't put Humpty back together again.
Thanks for the reply. I'm a bottom line sorta guy. All the tweaking and lever pulling is hurting the very people who are expected to get out there and make this thing work. More looting of the Treasury is not my idea of a good time. Let's get it on.♠
deleted
it's called the cleansing effect of depressions.
is he finally reading ZeroHedge??
If Roubini is so smart, then why did he flip-flop when millions of non-experts have been say the same thing consistently for the past 2 years?
His ego is showing...
Flip flops weaken credibility for those who seek the spotlight.
Look closely at Roubini's tie. His tie is loose around his collar. Roubini's loose tie is signaling more loosening of Fed monetary policy.
Look closely at his gray hair, gray hair is a sure sign the end is near...
I'm surprised that his tie is not around his ankles.
I smell hypocrisy here on 1 hand does ZH deride all and any economists but then it capitulates to those who say what ZH wants to hear. Roubini is just another Economist with 0 real world experience, a proffesor at some University preaching to the choire. He'll be talking his book until we get out of this re(de)pression and than he will have enough money that he won't care so if you want to keep true to your ideals dont quote Any economists only businessmen and people who have hands on experience with the economy
ZH is'nt about economic doctrine, its about 'common sense'.
hearing common sense is like good music.
'sense' is in straight decline...and not at all common anymore. We have an idiocracy perpetrated by a media of marketing that merely 'sells'.
Thomas
What makes you think "businessmen and people who have hands on experience" are not talking their own book?
I am not asking this in order to give you a hard time or to be difficult. I am just saying that everyone (academic or not) talks their own book. I wouldn't throw away the ideas of all economists just because some have gotten things wrong for the same reason I wouldn't take the advice of every businessman who has idea on how capital markets work.
You should take all opinions in and accept/dismiss them based on your own analysis.
Here is your homework assignment. Indicate whether the statement:
is hypocritical and why. Please use no more than 500 words. You will be graded only on grammar, punctuation and other superficial things like how many time you use words with 5 syllables or more.
"The fall (bababadalgharaghtakamminarronnkonnbronntonnerronntuonnthunntrovarrhounawnskawntoohoohoordenenthur-nuk!) of a once wallstrait oldparr is retaled early in bed and later on life down through all christian minstrelsy. The great fall of the offwall entailed at such short notice the pftjschute of KrugmanFinnegan, erse solid man, that the humptyhillhead of humself prumptly sends an unquiring one well to the west in quest of his tumptytumtoes:
and their upturnpikepointandplace is at the knock out in the park where oranges have been laid to rust upon the green since devlinsfirst loved livvy."
KrugmanFinnegans Wake by James Joyce
I do see that as hypocritical, but then again I did have my nuance gland removed during a botched operation to cure my chronic pneumonoultramicroscopicsilicovolcanoconiosis.
Allow me to rewrite:
They are throwing everything they have at this. I personally know of 6 major corporations that are in full blown hire mode. I have to wonder if they are getting backdoor subsidizes to get people off the unemployment lines.
For instance IBM.
They are going to try every deceptive trick they know of to force the sun to shine. So let's not call for time of death just yet Dr. Roubini.
4th,
Major Corporations are the least affected in this mess.
They are doing the best, and ARE basically the only positive sign of any growth.
And now, WHY?.Because most are exporting, either their products,or jobs overseas,or have contracts with the Fiddral Goobermnt in some way.
There are exceptions, but not many.
"For instance IBM" - I think IBM also did quite well during World War Two (some people have the tattoos to prove it). It's a funny old world.
Are 6 major corporations in full blown hire mode enough to offset the 1 million small businesses that are reducing headcount in a desperate effort to stay afloat?
Thanks for the interview, but sometimes I wish Roubini would pull off a Houdini!
I wish the FED would do the same thing.
actually they seem to be good at doing it with our money!
No one seems to mention that we now print our GDP like some african country:
Y = C + I + E + G
with the G (comprised entirely of debt and counterfeit money) accounting for ALL "GDP".
The people who print the money decided that America is to be taken down, and so all manufacturing has been shipped by them to the next victim (asia, for now), leaving America unable to produce anything other than weapons and soon to be worthless FRN's. The global ponzi scheme, which is primarily British, requires slave labor and now that the marrow has been sucked out of the bones of the ungrateful American worker/economy, it is time to move on to the next batch of free slaves. They treat countries like strip mines.
Even with the obvious fraud of the "G" part aside, GDP measures consumption, not production. Things that anyone would agree are "bad" count as "good" in calculating GDP (for example, an unemployed person buying an iphone on credit).
Reb-
and in China, it represents the planned expenditures. And so the fraud goes on.
- Ned
Liberty, Boy, that is poetic. They strip mined America and their workers so America layes Baren. With nothing but empty mines, filled in quarys, and job less Americans.
"primarily British". WTF ?.. Can you please name for me the white anglo Saxon Protestants that run the show ?. All I see are Yiddish, not British.
Start with the scotus, then the fed.. Good luck.
While we are picking Roubini's look apart, how about them eyes! American Psycho eyes telling you he is not really there and does not give a flying Fu*k what you think of his opinion, today, tomorrow or next quarter. BTW - did the check clear for this interview?
And to answer the newbies question: Of course we don't want to see a double dip or other economic mayhem. We just want the TRUTH....
Dr Doom is nothing more than a Short dressed up as a Havard Guidance Counselor. This is what will happen.. The economy will double dip. The Fed will print unlimited money. The stock market will go much higher. You and i along with our children will pay the bill.The stock market is an entity of the Fed, Thus it is immuned from from any feeble economic news. Economic news is so 90s. Its sad, but true.
More of the same double dip, tripple dip, quadrupple dip "talk". Roubini is repeating this story for almost 2 years. Here is what is going to happen : Christmas rally has already started and every short out there will be terminated - merciless. Mid term elections will give the stock market a booster.
If they had half a brain, they would have used ONE of the Stim pkgs, and sent every family in the USA a check a $100k.
If not every family, those under 75-80k a year.
I guarantee you it would have produced FAR more results positive, and just MAY have kick started the economy long term, IF they had stopped spending there.
But, then, that was, is not, never has been the PLAN. Has it?.
Even Odumma would have been re-elected.
Dr. Michael Burry will be on Bloomberg TV this Tuesday morning September 7.
FT trying to get into the global catastrophist hub business?
Azannoth, your "point" really loses its punch due to the fact that you can't spell or use something close to proper grammar.
Real freedom is easier to achieve when economic times are good than when they are bad. The techincal term is "liberalizing" but what that means is of course in the eye of the fanatic. Wishing for an economic catastrophe is precisely what ZH wants and it has its pure economic value and "song" in the refrain "bulls and bears make money." this strikes me as severely limiting one's intelligence let alone I would imagine both intellectual and life pursuits. It is to be respected, however since there is no greater truth than "bulls and bears make money." Neither make freedom, though. That requires something you will not find at ZH or any other site "based purely upon finance": namely inspriration. So....grade that "Tyler Durden." Who knows maybe you'll even grow a teste and use your real name in the process. Don't even get me started on girls....
Wow, did you really miss the point. What you call freedom in economic good times is nothing more than whatever the master has trained you to believe. I can not, and therefore will not, speak for TD or other ZHers. As for me, I believe that sometimes to fight a cancer you need to remove the tumor. You can not ignore it and hope it gets better and you can not play along and hope that you benefit from the game.
I believe that a collapse is coming. The signs are clear for anyone to see. I believe that a drunk will not get help until he hits rock bottom. Equally a nation can not find its spine until it reaches the collective realization that the current system is broken and that a dramatic fundamental change is needed.
I advocate a return to the original intent and words of the constitution. A nation of sovereign citizens with property rights and success based on merit, no theft. A limited Federal Government without the power to infringe on its citizens rights or the citizens of foreign nations. Sovereign States where citizens are free to fail or succeed on their own, without interference of the nanny state. A nation were neighbors cared for neighbors because of need not sloth.
We have had great awakenings in the past. The War of Independence to free ourselves from a King. A Civil War to free ourselves from slavery. I believe we are about to hit a very ugly pit. We can emerge two ways. Either we have another Renaissance or we fall into a dictatorship. I own couple of years worth of food for the dark period. I own gold in case of a Renaissance. I own lead in case of a dictatorship.
A civil war to free "ourselves"? There was two distinct political entities and the "Union" forcibly made the CSA rejoin. There won't be a Renaissance, and I doubt you will be using that lead any time this decade.
We have been in a Depression since all this crap started. Things get worse, and no recovery.
"so basically damned if you do and damned if you don't vis-a-vis stimulating, which is precisely what we have been saying for over a year: the central banks have boxed themselves in a corner from which there is no escaping, regardless of what they do."
BINGO, so I think it is pretty obvious why Ben and co. are choosing the stimulus path. If we are f***ed either way, might was well get high first. Give everyone a few more months of fake prosperity, and allow the financial elite some time to formulate their escape plans.
@goldsaver
+1251.20.9mm
Good thing the planet is finite and there is nowhere for the elites to run.
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