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Roubini Discusses Gold, Trade Deficits, The Exit Strategy And China
Roubini was on Bloomberg TV earlier discussing the key daily topics of the past month, which include the trade deficit, the Fed and its exit strategy (ZIRP in perpetuity is a strategy), China, and gold. Of course, with Primary Dealers and math Ph.D. fully in control of the no-volume market now, and having absolutely no interest in issues such as geopolitics, economics, finance, or basic supply and demand and mostly interesting in how to front run block orders in exchanges and darl pools, nothing that Roubini or anyone else has to say will have any bearing on the market for as long as the volumeless melt up persists, days like today being a shining example, where news of potential Middle East war are enough to bring the market by about 2 basis points.
On Gold:
“Well, in my view, gold is not going to rise to the levels $1,500, $2,000 the gold bugs argue because gold tends to sharply rise only under two conditions. Either there's a significant increase in inflation - and in US, Europe, Japan, we worry more about deflation than inflation. Or gold rises when there is really risk aversion like after the collapse of Lehman or a year ago when the banks US looked like borderline insolvent. So we have avoided the tail risk of a near depression. So gold prices shouldn't go higher. And for now, there is more deflation than inflation. So for the time being, I see gold in a very narrow range, not shooting up much higher than current levels.On the current trade deficit:
“Well, first of all, the widening of the trade deficit implies that in the first quarter, net exports are going to be a negative contribution to the negative growth. It's true that consumption growth for the first quarter might be close to 3 percent. But I still expect a growth rate for the first quarter of about 2.5 percent below trend, because if you look at the other components of aggregate demand, net exports are contracting, fixed investment is anemic because both residential and non-residential investment are still falling. CapEx spending is growing only anemically, and government spend is not going to be a significant contribution to economic growth. So when you add all the components of aggregate demand, we still get the growth rate of barely 2.5 percent. That is even below a potential growth rate of 3 percent. This at a time where the policy stimulus is still at the maximum. But the second half of the year as the policy and stimulus wanes and the restocking stops, then we're going to have even lower economic growth, closer to 2 percent. That's the scenario of an anemic, subpar, below trend, U shaped recovery.On whether the Fed should craft an exit strategy:
“Well, for the time being, the Fed is saying they're going to keep zero rates for the foreseeable future. That's not going to change. In my view, the Fed funds are going to stay at zero until at least the first quarter, if not the second quarter, of next year, given we're going to have anemic economic growth, and we'll have more deflation than inflation. And the Fed might try to start mopping up some of the liquidity. But I think that actually chances are they're going to resume further quantitative easing, because if they're going to have a backup in mortgage rates or ten year treasuries, the last thing that the Fed can afford in an election year is having a crowding out of the recovery of housing that is already an (inaudible) recovery during an election year. So if a backup in yield were to occur and mortgage rates go higher and higher, the Fed is going to eat its own words, reverse what it said, lose some reputation, and resume further QE directly or indirectly. They could use, for example, Fannie and Freddie as a way of effectively backstopping the mortgage market. So I see zero rates and maybe more QE rather than less QE.On China:
“Well, they're going to do it only gradually. In the best of all worlds between 2005 and 2008, they would allow only a 6 percent appreciation of the yuan relative to the dollar when they were growing much faster and they did not have employment problems. Today they're growing more slowly, exports fell, the recovery is anemic. Therefore, they're going to let the maximum, in my view, 3 percent to 4 percent of their currency per year. Something that's going to allow at least the U.S. to signal there is some movement, and prevent the U.S. from declaring China as a currency manipulator. But the pressure is on us.”
As for the market, the PDs will not stop until they finally get retail investors to capitulate and start buying up the banks massive stock holdings whose prices have surged primarily due to shell games among the various Fed representatives on earth, in which each one bids up (with massive leverage) the stocks of everyone else, and vice versa. The only question is whether they can sucker enough retail investors to offload their prop holdings to, recall that mutual funds are now out of cash, before they take the market down. In the absence of retail animal spirits, the market will continue to melt up as the PDs do everything in their power to make the market a travesty of valuations representing underlying cash flows.
Part of Bloomberg Roubini clip:
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Coed hound.
But equities ramp to infinity right?
Does he begin every sentence with "Well"?
Haha, just noticed that.
At least it's better than every economist that feels obligated to use the word "indeed" every 5 sentences,
Indeed.
I hate the guys that start off each sentence with "Basically..." Really overused word nowadays.
While I don't agree with you completely, I basically agree with you.
Well played sir, indeed, well played.Basically.
I don't want to take away anything from Roubini or mean to be rude, but he is a puppet.
its ok, go ahead...
I tend to agree with his assessment re: gold and the inflation/deflation argument, but Roubini bores me. Same with Taleb. They have been doom and gloom for years now, (and they've been largely correct, I am aware...) but they've given us nothing new since the onset of the crisis. And it was only new to most of us then because we hadn't been paying attention to them before that time. That's not to say there isn't merit to the arguments (then or now), just that they've been preaching the same story for over 2 years. It's tiresome.
These guys will be interesting once they turn bullish.
Taleb will never turn bullish. He's been telling everyone to short the S&P since it was at 1050. These guys get lucky once and confuse it with knowledge. My guess is, you won't hear from Taleb again until S&P is challenging all time high within a year.
There are lots of permabears and permabulls, but few that vary between bullishness and bearishness. I'm convinced they do it for name recognition. Every time the market is going down, CNBC can get Roubini back on for an interview. Those flipfloppers who are sometimes bearish and sometimes bullish never get air time because of their lack of "quotability." Can you imagine an interview where they asked Roubini to re-iterate his doom and gloom story and he started talking about how bullish he was. Awkward. Cut to commercial!
There are lots of permabears and permabulls, but few that vary between bullishness and bearishness. I'm convinced they do it for name recognition. Every time the market is going down, CNBC can get Roubini back on for an interview. Those flipfloppers who are sometimes bearish and sometimes bullish never get air time because of their lack of "quotability." Can you imagine an interview where they asked Roubini to re-iterate his doom and gloom story and he started talking about how bullish he was. Awkward. Cut to commercial!
That's why I like Marc Faber. He understands the endgame, but in the meantime he called the March 09 low in the S&P.
I love his advice to buy some physical gold or silver every month will help you become "your own central bank".
Read his (Taleb's) books and you'd understand. They haven't given anything new since the crisis began because, essentially, nothing has really changed. It's your thinking that is incorrect. If you hold an apple in your hand, and knowing you are holding an apple, it does not help to know the specific weight within a 1/100th of a gram, and specific circumference to the micrometer. Knowing this information doesn't make the apple an orange! You just have more data (and your certainty increases that you're holding an apple).
I follow this information because I (knowingly) have an unhealthy addiction to the information, and the fact that it is interesting to me. My conclusions haven't changed, but my certainty increases.
If you don't want to read Black Swan, read this below. It speaks to this issue specifically.
http://www.amazon.com/exec/obidos/ASIN/1422176754
he is not doom enough
we have avoided a near depresion?
maybe but we have guaranteed complete collapse instead
"nothing that Roubini or anyone else has to say will have any bearing on the market for as long as the volumeless melt up persists, days like today being a shining example, where news of potential Middle East war are enough to bring the market by about 2 basis points."
Tyler, I note that the Great Roubini postulates that the Fed will be forced to continue QE and Treasuries blast skyward. Methinks the Great One's prognosis did indeed have an effect.
I would be far more interested in Roubini demanding on public tv, specifically, CNBC, that banks go back to using mark to market.
Or how about discussion of JPM's OTC derivative monster. I have never once heard one of these professors ever go there.
Gold is money...... and he's talking fiat currencies, and the two are not the same. Hyperinflation is the result of a crisis in currencies, thus the cost of more fiat currency needed for ownership of money(gold)
This guy is another stooge another mouth piece , a tool . Roubini will have zero credibility soon.
Gold is money? LOL!!! Try buying groceries with gold. Try paying your electricity bill with gold. Cold Hard Cash is money.
No, cash is currency. FRNs don't meet the definition of money.
`Maybe not Gold jory but silver !
check this out - maybe a window on the future and the beginning of the end for the dollar system , notice the versatility of the grocer/metal dealer.
www.youtube.com/watch?v=F_DZhk-1hO0
Craigslist I've seen people accept silver and gold
Gold is colder and harder than paper, my friend.
Try buying groceries in Zimbabwe with the local dollar. Everything there trades for gold!
now why on all places i would go to zimbabwe to buy groceries lol
Oh god, not this conversation again.......
So. Um. What makes you angry enough to smash these guys into goo? Just asking.
Not exasperation...
+1
HAHAHAHHHAAAAHAHAHAAAHHHAHAHAHAHAHAHAAHAHAAAA!!!!!
Until it isn't.
100 - 1; 6 weeks to ship 15koz silver from hk; near empty vault
enf said
He resembles Jose Jiminez...
Since when does the market care what an economist says the market should do?
gold does not always go up with inflation
thats BS
It goes up when there is a loss of confidence in the system
Absolutely... 1980 to 1999 is a good case in point.
During the long deflation after the civil war, it fell hard.
I think too many people conflate 'inflation' with 'currency crisis.'
Poor Bill Murphy got his face planted in the sandbox once again by the COMEX bullies.
Amazing how they can take gold down at will.
Why is that amazing ? I believe paper markets( Comex) as leverage over physical .
All they are doing is allowing for a transfer of physical to those who realize what is going on at a lower than market price.
I LOVE the manipulation. I wish it would go on for another ten years while I consolidate a massive supply of gold and silver. Hell, my silver collection is getting close to being a significant percentage compared to the actual holdings of certain bullion banks. If this shit were to blow tomorrow, my annual salary probably wouldn't buy 10 oz of silver, but as it is, it buys much, much more.
I am willing to bet a single silver maple leaf that the zero hedge community holds more silver then the reported 60,000oz held in the vaults of ScotiaMocatta.
If each of us hold a average of 500 ounces then that is just 120 people !
Bet accepted! Please send proof within a reasonable time. You only need to prove 59,800... :)
Well Frank you will have to accept I am a gentleman when I say I hold 773 ounces so make that 59,027......
Any more fellow zero hedgers who wish to declare their holdings
Please be sincere ladies and gentlemen.
Well, Doc, you seem honest from what I've read of you so 59,027 it is. 773? An odd number... you visit 27 wishing wells lately?
Frank I do come from a strange part of the world with unusual pseudo / pagan / christian rituals
www.youtube.com/watch?v=kZjM83wZmWw
curiously enough that clip came from a time of economic hardship and now the same things appear to be repeating itself albeit at a even more farcical level
I observe a more simple pagan worship of honouring all shiny metals that were born in the heart of a exploding star.
She would not be pleased
Oh, how I wish I could just believe. In god, government, whatever, anything! For a long time I felt sorry for religious followers but lately I wish i could believe in something that would save me/us. Maybe I could make a new experience trifecta out of a visit to Ballinspittle grotto... Drop acid, see a miracle, believe in a divine power. Alas, I feel it will never happen apart from the first part possibly. I am seriously thinking about giving up following the whole financial circus and ZH and the other blogs. I am feeling really really down lately, and have withdrawn from a lot of friends. I have lost hope and I need to just not worry and live life like everybody else but it is hard not to look at the oncoming truck as I stand in the middle of the road in concrete shoes. Thinking about becoming a buddhist. I embraced the life is suffering viewpoint ages ago anyway (and i like my hair real short) .
PS. watch what clues you leave behind about your location/identity when divulging how much money you have. I've noticed a few people on here dropping bread trails that could very easily be tracked by someone with bad intent.
Get into an exercise routine Frank.
Its amazing how 30 to 40 minutes of hard exercise helps one's mental attitude....Start today
Don't worry about the stuff you can't change and change the stuff you can...If that doesn't work, just drink until you pass out every night! (kidding)
It's funny you mention the exercise thing... worked my bag off today outside in the yard/garden and it felt great! The thing is there is very little I can change - I've tried, I've given out hundreds of differnet DVDs, talked to hundreds of people and doubt I have made much difference. I know I woke up a young couple I met who worked at the IMF and blew their minds but it hard to get people interested in looking at the rotten foundation of their house when they just want to sit in front of the tv. Unfortunately, I've been drinking like crazy and oblivion is a near nightly goal. I tried to go last night without a drink and didn't make it. Seriously, I have to give this financial stuff up... It's worse for me here in Canada because we (so far) missed the real-estate nose dive. I sold my house 3 years ago and was sure it was the right thing to do, but reality (and realty) has said fundamental logic is dead. Originally, I was just trying to find out why housing prices were going up like crazy since 2000(in relation to wages), and why my parents had to walk away from their house in 1980 when interest rates were 20+%. The trip down the rabbit hole hasn't ended for 5 years, and I thought I saw a light at the end of the tunnel after 2 years!
As per the ZH motto, Frank, no one gets out alive. No one.
So, enjoy the ride?
Frank I would not recommend a trip to Ballinspittle if you are feeling down - bad idea
also not to worry I now reside far away from the land of my birth.
lol, that video certainly didn't move me to put it on my "places to see" list.
added: hope you didn't think Ballinspittle was the first of my trifecta. hehe
Dogs, shotguns and good neighbors. And a surprise for those who get past me. But thanks for the heads up. Surely the government stooges will drool.
good neighbors... The area where I and most people live would turn into mayhem if the grocery stores were closed for a week. You know what's fucked up? I am fairly well stocked, and i know no-one around me is, but if the shtf there is no way i could hoard food and watch people around me starve so I would be supporting them with my foresight because not helping people is a life not worth living as far as i am concerned.
Thats's part of the prep though, providing a little something for the neighbors. No plan is complete without it.
Frank Owen here is a mantra for you fron an ex buddhist ex eckist ex human
FUCK IT
1694
Rusty does that mean you hold 57333 ounces in your possession and we have just 1694 remaining !
or are you a representative of the Bank of England and you are telling us that the banks silver reserves are not very substantial
Sorry. Misunderstood the concept. Holding 1694 in physical.
1694?! You're the guy who bought that bank aren't you? Rusty Shackleford my ass, more like Silver Shackleford!
800 oz well hidden
Comforting....
Now my ZH homepage banner ad is for cougarlife. Much better IMO. Just waitin' for a good Russian bride sponsor to show up.
No, wait for the Ukrainian bridal agency ads.
They are the really good ones.
For all his obvious intelligence, Roubini clearly does not understand the first thing about Gold.
Either that or he has become just another Fed/JPM/GS stooge.
Ah, he got his 15 minutes, got to nail some hot chicks, sign up for some big $ speaking engagements. Life is good, for him.
Another Japan parallel... remembering how the keiretsu held each others' stocks at par year after year.
What we have is a virtual keiretsu.
Looks like he has been bought and paid for. Somebody got to him.
Unfortunately, he's nothing but a two-bit bankster minion now.
This is dated but to the point:
Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
I wonder how Roubini would define "significant" inflation, and if in his opinion it occurred between 2001 and 2009, when gold rose almost $1000, from $255 to $1212 an ounce, even in the face of incredible downward manipulation.
He looks to me as if he has Soros of the liver - perhaps to many late nights in the company of The King of Speculators has vaporised his brain cells as well.
He's saying that there will not be high inflation in the near term and that the system is fixed. I believe the first but I think he's wrong on the second. Time will tell.
Roubini is a rockstar!!!....live right now:
http://american.com/archive/2010/april/the-deflating-bubble-part-vii-is-it-over
I followed Roubini before he was cool, back before the housing bubble burst and everyone in the media laughed at him. It's amazing how being proved correct can destroy one's future credibility. He used to bring some valuable insight, unfortunately now he is indeed a puppet. He sure does know how to party though!
http://news.goldseek.com/GoldSeek/1271167200.php
The likes of Roubini will forever be relegated to the dustbin of history.
You know, for the life of me, I will never understand why any of these dopes opens his mouth and removes all doubt.
http://www.zimdaily.com/images/zimdollartoilet.jpg
fiat money has lots of uses. I couldn't imagine gold will ever sink toi this level.
he has sold out recently
bei ng paid to say the FED saved the day from a near depression
never heard such shite in all my life
sad thing is though people DO think that the policies have worked. Thats the scary part
The melt-up can't last forever. It's not doing its job of pulling in dumb money. It only takes one player to cash in his chips to bring this game to an end.
Hey brainchild, how about that 100-1 leverage?
Hey PHD, I thought silver and gold PLUNGED when Lehman collapse
my wallet ain't agreeing with that statement
Translation: "We are you going to fuck taxpayer over."
Clearly he doesn't know sheepshit about China
Clearly you are a sheeple, he met with Wen last week in China...Who did you meet with last week your parole officer??? loser!
He's (sheeple) definitely is correct about inflation.
The increase in food prices from just 6mos ago, is UNFRICKEN REAL.
Eggs, were $.89dz Grade A Lg, now?.Try a $1.89!,Bread, $3.00 a loaf.........
Fuel, up $.50-$.75 a gallon, OJ $4.00gal, Milk $3.00gal,worst of all, the fkrs are selling same size pkgs, with LESS oz's, for SAME price..........
That's INFLATION.......any way you cut it.
These Frkrs are on crack, NO inflation.
Try living were the real people do.
The only thing DEFLATED is the dollar, and the Job Mkt...................all on purpose, and by design.
food prices definitely up. any idiot can see that. i don't see how anyone can see deflation in the cost of living. maybe some imaginary indexes...
my food inflation observation of the week - copella apple juice 'NEW' size just launched - 750ml (previously 1 litre bottle). about 5% cheaper.
This link is an example of fraud.... http://www2.mygoldenvelope.com/landing/A1/?LCLAND=A1&C=3055&D=1998&L=1&S...
They will pay you money for you're old scrap Gold. Rather it should read.. They will give you fiat scrap for you're money(gold)
Sheeple, good catch on the price action on gold after the Lehman event.
We must remember who Roubini is and what he actually identified earlier than most. First, what he identified (lest we forget, that is, along with Brad Setser, who doesn't seem to whore as much for the camera): They identifed that (A) running a trade deficit for several decades would probably cause problems, and (B) it probably couldn't keep increasing, especially at an increasing rate. Yes, this was economic insight at its greatest (though it did run smack against conventional economic wisdom). As far as I know, he did not specifically identify that which triggered the 'financial crisis' itself, namely too much f_ing debt. Second, as to what he is: he is a f_ing Keynesian. For example, his probable proposed solution to a skin scrape is more government.
Finally, he clearly lacks any understanding of primary drivers of PM prices, specifically gold. One of the primary drivers is the 'real rate of interest' (as a refresher, the price if inversely related to it). Thus, when the real rate is low, the price tends to go .... wait for it, .... uuuup, but not always. Therefore, he thinks the Fed will keep the real rate low to negative, yet there is no upward price pressure on gold? This alone tells me he is a financial moron, and I am ignoring the currency substitute aspect of the shiny metal (which I personally think is more important) and other drivers.
What we have here is a man who has found his 1,500 minutes of fame, and fortune, and no longer feels the need to think through much of what his hole spouts out.
on Tue, 04/13/2010 - 12:27
#298538
gold does not always go up with inflation
thats BS
It goes up when there is a loss of confidence in the system
******************************
It also goes up-without going-up-in price--
As assets decrease in price-and-they will "eventually" be forced down by the market-in deflation and high global unemployment--
Gold should increase in buying power-as prices fall beneath it-like what happened in the 30's-
Money is always king in deflation-just make sure-your not holding the wrong kind of money--
going to need significant loss of faith in FRNs to displace them. The Euro collapsing would do more for gold than the dollar
I have a 150 IQ, have a better education than Nuriel, and am skeptical of someone who lectures on Economics in the English language, but who cant say the word "quantitative". His first attempt results in "quantitive" and thereafter he shies away and says "QE". Granted there is a lot of math involved in economics, but you need to have at least quality verbal skills (because they are connected to social understanding and fluency), when you are opining on the direction of the country, of the world.
Most people, however, have math issues that prevent them from getting a good idea of economic situations. I think 90% of people repeat reasonable sounding opinions they hear on the economy, but cant get beyond that to any kind of decent understanding of the economic issues facing the nation/world, because their basic math skills aren't great-- or better put, their sense of the comparative scale of numbers is poor. E.g., people dont understand what a joke the budget deficit numbers are-- i think all discussions of america's future pretty much come down to the fairly simply statement- "its the deficit, stupid." (i.e. "America is toast... its the deficit, stupid.").
re. gold/silver. I think the price of gold probably should get to something like $100,000/oz. That would make sense to me at some point down the line. $5,000 in next few years sounds reasonable. Think about an ounce of silver being $18. Thats a 12 minute cab ride in NYC. There are 6 billion people in the world, silver is in very limited supply... a cab ride for an ounce seems like a huge mispricing. Another interesting thought experiment is this -- i believe there are 5 billion above-ground ounces of gold in the world (that figure could be off somewhat). There are 6 billion people. If one considers gold the only real money, more or less, and you wanted to split up all the gold in the world evenly, everyone would get an ounce. So if we leveled the playing field in that manner, you could speak (in some sense) of everyone's cash wealth being 1 ounce of gold. So if you own n = 10 ounces of physical gold, this could be thought of as 'owning' n - 1 = 9 people. That is why I wrote Nuriel's mom's name ("Ronit") on one of my maple leafs-- i heard she is 100% in treasuries & cash.
You sound nice, it was a good read, but whats an I.Q. ? and where do i get one.
If you do one of those online short IQ tests they make it real easy and give you bonus points. Its well worth going down that path if you want to get one.
Mere human "merehuman": I dont know what I.Q. is-- your term(?) Presumably something interesting maybe? I notice your expression contains the same two characters of the term i used - i.e. IQ, though your term (presumably?) means something different than mine (?) Mine is my sort-of shorthand for Idiopathic Quorum- my own personal expression for a (presumably?) sufficiently numbered body of decision-making entities (people?, computers?) which generally enacts laws, rules or sets in place an appartus from which actions are effected, when the etiology of said sufficiently-numbered body is not immediately obvious, or not immediately palpable to the senses of more necessary decision-making entities (people? mousetraps?). A number can be found in Washington, District of Columbia, Cf. Congress, Senate Banking Committee. But whats this I period Q period you speak of -- Im so sure its really interesting, weed.
I like weeds. And its all the smart ones that got us here. So you might understand where i am coming from. I took your statement as an arrogant braggart of supreme intelligence. Someone who lives in their head more than their heart. If i am mistaken, consider this an apology.
If not, up your bucket. Me , i think you are too smart for your own good.
didn't gold go up $50 in one day last time the fed made some type of QE based announcement. i doubt POG will remain stable and at these levels when QE2.0 is launched. bernanke is gonna be firing blanks...
Bow Tie, I could have sworn Bubble boy has been firing blanks all along
Roubini has to talk gold down or he doesn't get his grind and pelvic rubs on with those hot chicks at the "chic" NYC parties.
Plus he has no clue about the ideas of desperflation. None that he would discuss publicly at least.
Johnny: Gold ain't got nutting to do with his getting his grind with the hottest chic's on the globe! The guy is a major stud and when not supermodels, most of them areeconomists, bankers and recent MBA grads...they know the real deal...lol
And I believe the clueless one is you!!!
The Roubman is simply not good enough to be
presented in the ZH halls of truth and wisdom.
Give the poor guy a break, he obviously has been
educated beyond his intelligence, and shouldn't have
to be responsible for this econ-drivel. Read the
numbers on silver certificates, silver dollars, gold
coins, what have you, and the whole discussion of
inflation/deflation is moot. Even a child can make
this call. The man is simply a shill. Next.
I'll bet this dumb fuck an ounce of pure its over US$2000 by end of 2011. How do I get his sweaty mit into mine on that one... any ideas?
"in US, Europe, Japan, we worry more about deflation than inflation."
That sentance says it all, why you should be worried about inflation. This is what guarantees inflation....
http://american.com/archive/2010/april/the-deflating-bubble-part-vii-is-it-over