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Roubini Sees 60% Chance of A Double Dip in 2012, China and Brazil Also at Risk
By EconMatters
Party heardy NYU economist Nouriel Roubini went on Bloomberg TV on Aug. 31 to give his latest prediction of the global economy:
"We’ve reached a stall speed in the economy, not just in the U.S., but in the euro zone and the UK. We see probably a 60 percent probability of recession next year, and, unfortunately, we’re running out of policy tools.....and sovereigns cannot bail out their own distressed banks because they are distressed themselves"
Regarding markets and QE3
"There’ll be more monetary easing and quantitative easing done by the Fed and other central banks, but the credit channel is broken. ...the market is rallying on the expectation of QE3, but I think it will be a short-lived rally. The macro data, ISM, employment, and housing numbers will come out worse and worse, the market will start to correct again."
The bond market is already expecting a recession,
"...After the S&P downgrade, bond yields fell from 2.5% to 2% or below. The bond market is telling as a recession is coming and the flattening of the yield curve is telling us that."
But since the short-term interest rate is artificially held down low by the Fed,
“Traditionally, you can have inversion of the yield curve. Right now, we have policy rates at 0......We cannot have an inversion because you can have negative long-term interest rates. That’s the reason we don’t see the inversion.”
Dr. Doom did not forget about China either,
"I see a hard landing in China as the likely event, not this year or next year, but by 2013 when this over investment move will go bust..... Fixed investment has gone now to 50% of GDP. this over investment boom is going to go into a bust in a hard landing.”
"[Chinese banks] have several trillion dollars yuans and we estimate 30% of these loans will go into default and become underperforming. The heat will be on the Chinese banks.”
After the C, he then went on to cover the B in BRIC,
"Brazil has its own other domestic problems, if they do the structural reform that’s needed. It could have high potential growth, but the question is whether the new president will be willing to do those structural reforms to reduce the distortion and increase the potential growth of the country."
Commentary by EconMatters
Shortly after the interview, Bloomberg ran this headline - U.S. Stocks Pare Gains After Rubini Says Recession Is Starting. It might be that markets really rise and fall on the words of Roubini or it could just be Bloomberg pumping its TV news show; regardless, we believe there's not enough clear indication to declare a coming recession yet.
Remember, this is the traditional summer doldrums, and markets are still reeling from the unprecedented downgrade of the U.S. debt by S&P, black swans flocking in Europe certainly has only added to the market turmoil and volatility. So it is logical to see some mixed and somewhat pessimistic data coming out of this current environment, but they are not indicative enough to extrapolate out a recession.
Also keep in mind that 2012, the year when Roubini predicts the recession would hit, is an election year. You can bet the Fed, the Obama Administration, and the Democratic Party will pull out all the stops to stave off a downright recession.
So we think a slow / anemic growth is a more likely scenario; however, this is not to say there's no possibility that Roubini could be right.....again. After all, the man has been predicting double dip for the past four years, and even a broken clock could be right at least twice a day.
(Pardon our tech inept unable to post the vid on ZH. If interested, the Bberg vid is available at our site)
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RUBE-Beanie has a rare talent for attempting to state the obvious - and then getting it woefully wrong.
WTF's with this guy? Should go back to haunting houses in Transylvania.
" You can bet the Fed, the Obama Administration, and the Democratic Party will pull out all the stops to stave off a downright recession."
Yeah, this is the Dream Team that has been SO successful at keeping our economy on a sound footing, that OF COURSE they will also keep us out of a recession.
Oh, sorry, you say we never actually exited the Great Recession we entered in 2008?
My mistake, carry on.
Roubini: gold is in a bubble. Cash is the place to be:
"Well, cash or the debt of governments that are not insolvent that are still safe, like the US, Germany and a few emerging markets is a safe place to be."
http://www.moneyweb.co.za/mw/view/mw/en/page299360?oid=551006&sn=2009+De...
Roubini 2007:
Gold is in a bubble and will go down (US$ 710/oz):
Roubini 2008:
Nouriel Roubini called gold (US$ 810/oz) a bubble in several tweets
Roubini 2009:
I do not believe in gold (US$ 1040/oz)
Roubini 2010:
Don't jump into gold (US$ 1090/oz)
Roubini 2011
Gold is becoming a bubble (US$ 1900/oz)
I think they should have a TV show called "The Biggest Gainer". $1 million prize for the first guy who eats so much and gets so fat he dies of a heart attack (or other obesity-related disease.)
Shots of guys jamming cheeseburgers in their mouths while puffing multiple cigarettes, downing shots of whiskey, etc.
Shots of his kids yelling "C'mon Dad, we really need the money!!!"
Count Crockula.
Roubini is a joke. and why we should listen to the guys like him that favor the status quo?
I see a 40% chance for some pizza and beer followed by some ice-cream and a 70% chance that my gfriend will not have a headache after that!
What happened to his V shaped recovery vs U shaped Recovery.. when their has never been one? I read his material around 2007 when he was ahead on the Housing collapse predicitng a Recession but he went downhill sharply after that.
60/40 bet sounds pretty safe to say.
Why don't Roubini short 60% of his portfolio?
plus, you can't have 60% chance when you are already in recession for last 10 years at least. only in Wall st. thinks equities markets is a true reflection of the real world.
NYU just wants more fed money to make their recent MBA alums unemployment numbers lower.
The only clock that is ever right: we've existed for less than a second, and we're four seconds to armageddon.
A clock that is off is never right. Roubini constantly predicts both sides of the coin so he can claim he's right. Whenever he goes out on the limb, he's always dead wrong. He said oil wouldn't go above $40 in 2009. He said Gold wouldn't make it above $1100 and would crash well below that. He said $2000 gold was "nonsense". And no, he didn't predict the financial crisis. The NYT just wrote up an article that claimed he did and he has lived off of it ever since.
Ahh-ha! The NY Times - that expalins it "All the News that's fit to make up"
Didnt know anyone still read that tripe.
Roubini is a fraud.
The real Dr. Doom is Marc Faber
Roubini has vagina imprinted walls.
Nouriel Roubini's Wall Vaginas RevealedHey, Dr. Doom, come over to fight club, bitch.
He should have one imprinted on his forehead - truth in advertising.
I heard him referred to as "Count Chocula" on the Fight Club Boards.
I think it suits him better than the mainstream Dr Doom name.
Roubini asked last month "Is capitalism doomed"?
Geez Rube, we won't know 'til we try,will we?
Roubini has talked crap about Tyler. I wish Tyler would break Roubini's fu*king jaw. Yeah I know Tyler is 3 or 4 people but there supposedly is one dude who is T.
I would love to see that also. Maybe they should start a reality show called "Fighting with the Stars" and have a couple of main events where Tyler shitkicks Roubini and Newt mixes it up with Harry Reid. Just think of the possiblilites. I can imagine about 300 different fight setups.
I don't watch reality TV but I would definitely pay $39.99 for that show. Plus Tyler's picture makes him look like a lot meaner MoFo than Roubini.
Roubini is a fool. We have been in recession since 2000. We just faked our way through it with leverage.
Roubini reminds me of Mark Twain's saying.."if a man goes about with a prophecy gun and keeps blastin' away...by and by he's bound to hit somethin'."
Like placing one chip on every square of the roulette table.
Roubini doesn't even understand a simple 2 step process. First deflation from collapse, then the fed response which leads to inflation.
Could Katia Follow in Irene's Footsteps?
The storm, which is developing over the Atlantic, reached hurricane strength late Wednesday.
By Laurie Rich Salerno
http://meriden.patch.com/articles/could-..
But have no fear. This gives Barry another excuse to print and Hand out another Trillion $$$$.
"After all, the man has been predicting double dip for the past four years, and even a broken clock could be right at least twice a day."
Uhhhh.........a broken clock IS right twice a day.
Not if it's a digital clock.
it's unfortunatley not a digital metaphor in intention.
i hate this place...its always China or Brazil...no mention of INdia
India's gold buying season is coming up soon. Buy gold and have a nice curry.
The Indians lost the war here years ago. Ever since the Great Sioux War of 1866-67, it's been downhill ever since.
My dog has a better understanding of economics than Roublini. At least he figures that an Ipad can't be eaten even if its price is going down.
Well, predicting a second dip to the recession is like being a couple days late to your own birthday party. Like who is surprised around here?
roubini only does well with a captive audience that has no capital at risk with his teachings.
College kids do NOT! know any better.
roubini's 20 year old girl friend / teacher's pet / teaching assistant / cheerleader LOVES Him!
we will see how long that lasts when he loses her or her family money. LOL!
James Workman
roubini only does well with a captive audience that has no capital at risk with his teachings.College kids do NOT! know any better.
roubini's 20 year old girl friend / teacher's pet / teaching assistant / cheerleader LOVES Him!
...
we will see how long that lasts when he loses her or her family money. LOL!
We have invited the great roubini to stop by zerohedge and to bring his book with him so that we can compare earnings, to date he has been to busy with the summer heat in the city to bother. this was my response to the article mentioned above!
New item in your series of interest:
Country Report No. 11/265: Macao Special Administrative Region of the People's Republic of China: Report on Observance of Standards and Codes (ROSC) - Basel Core Principles for Effective Banking Supervision
http://www.imf.org/external/pubs/cat/longres.aspx?sk=25204.0
New item in your series of interest:
Country Report No. 11/264: Macao Special Administrative Region of the People's Republic of China: Financial Sector Stability Assessment
http://www.imf.org/external/pubs/cat/longres.aspx?sk=25203.0
________________________________________________________________________________________________________________________________________
New item in your series of interest:
Working Paper No. 11/210: Public Debt in Advanced Economies and its Spillover Effects on Long-term Yields Author/Editor: Alper, Emre ; Forni, Lorenzo Summary: Several models establish a positive association between public debt ratios and long-term real yields, but the empirical evidence is not always conclusive. We reconsider this issue, focusing in particular on possible spillover effects of large advanced economies’ debt levels to other economies’ borrowing yields, especially in emerging markets. We extend the existing literature by using real time expectations of fiscal and other macroeconomic variables for a large sample of advanced and emerging economies. We show that an increase in the public debt levels of large advanced economies - especially the United States - spills over to both emerging markets and other advanced economies’ long-term real yields and that this effect is significant at the current levels of advanced economies’ debt ratios.
http://www.imf.org/external/pubs/cat/longres.aspx?sk=25201.0
JW,
You posed links to that Renassance 2.0 vid on youtube yesterday, correct? If so, thanks for the link. It is a great lesson/analysis. Please continue to share your links of interest.
a lot of the links I post are gifts that someone else has given me.. and I just try to share good stuff.
by good stuff I dont mean video's people will like.. but more video's that will get people thinking..
the best video I have seen in a good longggggggggggggggggggggggggg while is this one ---> http://www.openfilm.com/videos/psywar / http://metanoia-films.org/index.php .. it is a movie lentgh documentary.. but it is fantastic! CD posted it lasst night or yesterday evening?? which ever.. but ALL! Credit to CD!! and my personal Thanks!
But if you dont watch this video.. in total and like it.. maybe NOT! like it in the sense of what happens.. but of the quality of the information sense like it.. I will eat my shorts and post the video of my doing so on YouTube so that you can enjoy that instead.
If you find a Great or Good Video and you think it will help educate people.. PLEASE! Share It!! Pretty Please!!!
The only way we will win is if we educate ourselves and everyone else that we can!
I use facebook to spread the truth and I use twitter to spread the truth! I dont like facebook and its Goldman Sachs Money! But if I can use it agains the system! I will!! use any and ALL!!! paths available to me.. to spread the word!
Sorry to be so long winded! please post whatever you have back so that I can watch it and share it!
No need to apologize! I listened to it on my commute last night and a bit this morning. It was really great and well thought out; not too much I found myself disagreeing with
Here is the link for anyone interested: http://youtu.be/l37RhdFGVsM (links to subsequent parts in related vids section)
Personally, I think this should be added to the Required ZH viewing list.
You are absolutely right -- until we as a people are able to think outside the framework we have all been programed to function within, and are able to question the assumptions that comprise our foundational belief system, meaningful change will never come.
For me, it is a matter of simply believing that there is probably more than meets the eye going on. This vid does a great job laying out the battle field.
I will definitely check these other two vids out. Keep 'em coming!!!
http://www.youtube.com/watch?v=VgIKMGQTSnM
Uploaded by RussiaToday on Sep 1, 2011
This time Max Keiser and co-host, Stacy Herbert, discuss intergenerational debt for IMF poster children; radical plans for EU banks; and an artist's incendiary painting as bank statement. In the second half of the show Max talks to Isa Blumi about the role of micro-finance and oil traders in unrest in Yemen.
KR on FB: www.facebook.com/KeiserReport
Didn't he read the headlines today. There is no chance of a new recession. The consumer is alive and well, manufacturing didn't contact as people feared, and jobless claims fell.
August didn't actually happen it was all based on unfounded fear. In fact every bearish sentiment and call is based on nothing but unfounded fear.
Of course we know that accuse your accuser of what you actually do is the only practice the banksters and the MSM know. We know that every bullish sentiment and high dollar call is actually based on nothing but the hope of returns that never materialize. Hopium makes Crack look like a kiddie toy.
I wonder if any trader actually knows the common practice of inventory stuffing and writedowns? Take homebuilders for example. I mean a publicly traded homebuilder can't just stop building homes, they have to keep building even if there is nobody left to buy them. At the end of the year the inventory they built will just be written off as a loss and they can continue again the following year. Or take a sporting goods store and its suppliers like Under Armour. There is enough Under Armour in stores inventory to last a few years but they keep buying more because they have to buy more because Under Armour has to keep producing more. That is why you have seen inventory levels continuing to build even though final sales haven't been that great. Any drop in inventory signals contraction and a public corporation can never show contraction or they will be decimated in the stock market.
That is how you get enough mouthguards in one store to supply an entire state's worth of football teams. That type of channel stuffing works great for a company about to go public like Shock Doctor because they can show explosive growth. Sales to end consumers do not matter because the powers that be at the sporting goods stores are all in on the IPO and supporting it to make a quick buck. The problem arises when said company needs to continue doing business and can not show a contraction in sales. That means that the inventory of mouthguards must continually increase or the company must go into other areas to show growth.
The entire retail system in the USA is one giant scam and there is virtually not a single corporation running honest bookkeeping. Does anyone really think that every single Dick's Sporting Goods sells over $25k in product every day of the year? To match their reported sales that is what every store must do. Really think about it and you'll see that it is impossible.
I am not going to listen to anyone who hold Karl Marx as a hero and role model.
Hey, RUBEini, it is a SINGLE-DIP recession, since it has never ended and morphed into The Greatest Depression...Get it, RUBEini?
In his defense (and I don't care for him particularly either...) he does not leave this out as a possibility.
Waiting until now to announce we are going to crash again is not very informative.
Waiting until now to recognized that China is in for a very hard landing is not very insightful.
Way to go Captain Obvious. I agree with the reader above, Roubini has no credibility at all. He is just a talking head.
Pssst! We are still in the first dip. We never left the depression, no matter what they are telling you and no matter what the stock market does. It's just the stock market, it's not the economy.
EconoMatters believes that Barry and Co. - an LLP - will be able to sustain this train wreck of an economy for 14 more months? I don't think so. The credit wheel is broken, ALL of the big banks and insurance company bailouts can't put Humpty together again. What's even worse is that yet another ignorant Texan could very well be our next president, since the sheeple are scared and stupid and superstitious and not necessarily in that order.
Or we may be stuck with the ignorant Kenyan.
Not that it matters either way.
Once again, I'd like to point out that both political parties are responsible for this abortion of an economy. The next president, Dem or Rep., can be relied upon to do exactly what he is told. Just like Obama, Bush, Clinton, Bush, Reagan, Carter, Ford, Nixon (insert tool here).
Hey Smiddy,
How can you write the above and still vote or even watch the 'fair and democratic election'?
what's wrong with simply ignoring the farce? just a question, for me, for you, for all to ask
thanks for the inspiration om