Economy ‘Far too Close’ to Double Dip: Roubini – CNBC
by Kenny on March 10, 2010
in Market Musings
You know, you can argue all you want that Nouriel Roubini is way too negative. You can argue all you want that things are better than they seem. You can argue all you want that the debt issues aren’t bad.
But I don’t think anyone can argue with Nouriel Roubini’s track record in the last few years. He’s called a LOT more of this correctly than most people have.
So when he says we’re far to close to a double dip recession, it makes me nervous and it should make a lot of people nervous.
KH
via Economic Outlook – Economy ‘Far too Close’ to Double Dip: Roubini – CNBC.
Poor economic data in the US coupled with Europe’s debt crisis are contributing to an increase of the risk of the US economy going through a double-dip recession, Nouriel Roubini, who predicted the 2007 financial crisis, wrote in a research paper.
At best, the US economy is headed for a U-shaped recovery this year, Roubini said. That has been his prediction in recent months.
The US faces challenges in the second half, especially as fiscal stimulus measures fade, and “appears far too close to the tipping point of a double-dip recession,” he said.
The euro zone is also facing an increased risk of a double-dip fall, because of its ongoing debt crisis, he wrote.
Even if the euro zone does not suffer a double dip, growth in demand will be even more limited and this will hurt the United States' potential for export growth, according to Roubini's paper.
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Live Tweeting a Nouriel Roubini Economic Outlook Conference
by Tom on October 20, 2009
in Market Musings
I spent an hour and a half on the phone this morning listening to a conference call that Dr. Nouriel Roubini did on his firm’s outlook for the next year (and more.) At the request of my friend Todd Waller, I “live tweeted” it and threw together a bunch of comments as what I “took away” from the call about the economy and it’s impact on housing. I was going to try to write out a more concise version, but I’ve got too much I’m working on. So, I decided I’d just post them all on here. If you want to read them in chronological order, start at the bottom. Keep in mind, this is my “takeaway” of what he said and if I misquote something or misheard something, it might not be totally accurate. If you’ve ever heard Dr. Roubini, he has an interesting accent but it’s sometimes hard to understand.
If you aren’t already and you’d like to “follow” me on twitter, I’m @tvanderwell. Todd is @toddwaller.
Enjoy – sort of.
Tom Vanderwell
- Roubini – scary thing about double dip recession in 2010-2011 – we have no policy bullets left!
- Roubini – risk of a W recession is pushed out until after November of 2010 (gee, what happens in Nov. 2010) politics will prevent it sooner
- Roubini – We see GDP at 1.8% in 2010 – well below standards of 3% plus.
- Roubini – the dollar will continue to weaken – and until we get a global rebalancing, it will continue to struggle.
- Roubini – wealth effect of equity and real estate markets will prevent us from a V shaped recovery. People feel and are poorer now.
- Roubini – housing supply demand imbalance is too big and needs to be adjusted – significant pain will happen while that adjusts.
- Roubini – has housing market bottomed out? price side – nope – close to 50% of people with mortgages will be u/w by 2011.
- Roubini – we’re more bullish on emerging markets than we are on established “high income” countries.
- Roubini – rising risk of protectionism could send us into a double dip recession…..
- @JimDuncan Yep.
- Roubini – $100 oil now is as bad as $140 a barrel was “then.”
- Roubini – oil prices could put us back into a double dip recession
Second Page
- Roubini – total consumption by India and china is 1/6th of what the US consumes.
- Roubini – can China be the engine of growth for the future – No
- Roubini – I love listening to Dr. Roubini’s accent. Just sayin’
- Roubini – mortgage rates will go to 7.5% by 2012 if not sooner.
- Roubinin – by middle of next year, bond market will wake up and say, “We can’t keep adding to the deficit”
- roubini – exit strategy – “damned if you do and damned if you don’t.” (and I quote)
- Roubini – tax credit artificially inflated house sales will wane.
- Roubini – falling home prices will continue – supply and demand imbalance is too big – shadow inventory is too big.
- roubini – capacity utilization is at 70% – ltos of excess capacity will slow capital investment and make it very anemic.
- Roubini – this is not a traditional recession, this is a leverage recession.
- Roubini – many jobs in finance and real estate are gone forever – so fall of unemployment will be slower.
- Roubini thinks that we’re going to have a “U shaped” recovery (50-60%) V shaped 10-20%, and W shaped 20-30% and growing.
Technorati Tags: Live Tweet, Roubini
Statements taken out of context….
by Tom on July 17, 2009
in Market Musings, banks
Part of the late day rally in the stock market yesterday was attributed to Dr. Nouriel Roubini making supposed comments that the economy is starting to rebound. Later yesterday, I got a press release from Dr. Roubini’s company that says that he hasn’t changed his views. I’m quoting the entire press release:
FOR IMMEDIATE RELEASE
July 16, 2009
STATEMENT ON U.S. ECONOMIC OUTLOOK BY DR. NOURIEL ROUBINI
The following is a statement from Dr. Nouriel Roubini, Chairman of RGE Monitor and Professor, New York University, Stern School of Business:
“It has been widely reported today that I have stated that the recession will be over “this year” and that I have “improved” my economic outlook. Despite those reports – however – my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.
“I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If as I predicted the recession is over by year end, it will have lasted 24 months with a recovery only beginning in 2010. Simply put I am not forecasting economic growth before year’s end.
“Indeed, last year I argued that this will be a long and deep and protracted U-shaped recession that would last 24 months. Meanwhile, the consensus argued that this would be a short and shallow V-shaped 8 months long recession (like those in 1990-91 and 2001). That debate is over today as we are in the 19th month of a severe recession; so the V is out of the window and we are in a deep U-shaped recession. If that recession were to be over by year end – as I have consistently predicted – it would have lasted 24 months and thus been three times longer than the previous two and five times deeper – in terms of cumulative GDP contraction – than the previous two. So, there is nothing new in my remarks today about the recession being over at the end of this year.
“I have also consistently argued – including in my remarks today – that while the consensus predicts that the US economy will go back close to potential growth by next year, I see instead a shallow, below-par and below-trend recovery where growth will average about 1% in the next couple of years when potential is probably closer to 2.75%.
“I have also consistently argued that there is a risk of a double-dip W-shaped recession toward the end of 2010, as a tough policy dilemma will emerge next year: on one side, early exit from monetary and fiscal easing would tip the economy into a new recession as the recovery is anemic and deflationary pressures are dominant. On the other side, maintaining large budget deficits and continued monetization of such deficits would eventually increase long term interest rates (because of concerns about medium term fiscal sustainability and because of an increase in expected inflation) and thus would lead to a crowding out of private demand.
“While the recession will be over by the end of the year the recovery will be weak given the debt overhang in the household sector, the financial system and the corporate sector; and now there is also a massive re-leveraging of the public sector with unsustainable fiscal deficits and public debt accumulation.
“Also, as I fleshed out in detail in recent remarks the labor market is still very weak: I predict a peak unemployment rate of close to 11% in 2010. Such large unemployment rate will have negative effects on labor income and consumption growth; will postpone the bottoming out of the housing sector; will lead to larger defaults and losses on bank loans (residential and commercial mortgages, credit cards, auto loans, leveraged loans); will increase the size of the budget deficit (even before any additional stimulus is implemented); and will increase protectionist pressures.
“So, yes there is light at the end of the tunnel for the US and the global economy; but as I have consistently argued the recession will continue through the end of the year, and the recovery will be weak and at risk of a double dip, as the challenge of getting right the timing and size of the exit strategy for monetary and fiscal policy easing will be daunting.
Dr. Doom – Nouriel Roubini
by Tom on June 22, 2009
in Market Musings
Dr. Roubini has some sobering thoughts about the economy, interest rates and oil prices……
Housing, Stimulus and Nationalization
by Tom on February 19, 2009
in Market Musings, banks, house prices
Thanks again to Bill over at Calculated Risk for making me aware of this video of Dr. Roubini. Many people refer to him as “Dr. Doom” because of his negative view of where things are at and what happened and is happening.
I prefer to refer to him as “Dr. Common Sense” because he, in my mind, makes a lot of sense. Listen to what he says about Housing, the Stimulus package and nationalization of banks.
More later,
Calculated Risk: Roubini: Housing, Stimulus and Nationalization
PBS’ Nightly Business Report – Professor Nouriel Roubini on the economy
Part 1 – Predictions for the New Year (Part #1 of 8)
by Tom on December 13, 2008
in Market Musings, house prices
Fortune Magazine did a series of short articles with predictions from some notable people. I’m going to feature one of them a day and then some comments on it afterwards. I’d hope that I could say, “Enjoy!” but they aren’t going to be pretty…..
The first one comes from Dr. Nouriel Roubini. A couple of words about Dr. Roubini. I’ve listened in on a couple of conference calls that he has led and the man is unbelievably brilliant. He is known as Dr. Doom because since 2005, he’s been calling this credit bubble and no one has been as negative as he has. No one has been as right either.
Here we go:
We are in the middle of a very severe recession that’s going to continue through all of 2009 – the worst U.S. recession in the past 50 years. It’s the bursting of a huge leveraged-up credit bubble. There’s no going back, and there is no bottom to it. It was excessive in everything from subprime to prime, from credit cards to student loans, from corporate bonds to muni bonds. You name it. And it’s all reversing right now in a very, very massive way. At this point it’s not just a U.S. recession. All of the advanced economies are at the beginning of a hard landing. And emerging markets, beginning with China, are in a severe slowdown. So we’re having a global recession and it’s becoming worse…..
And the recovery in 2010 and 2011, if there is one, is going to be so weak – with a growth rate of 1% to 1.5% – that it’s going to feel like a recession. I see the unemployment rate peaking at around 9% by 2010.
8 really, really scary predictions – Nouriel Roubini (1) – FORTUNE.
Tom here with a few comments:
- He’s got it nailed in that it’s not a mortgage thing, it’s a credit bubble. The entire world spent too much, borrowed too much and now we need to adjust to that.
- On a national level, I think that an anemic recovery in 2010 and 2011 might actually pan to be fairly accurate.
- On local levels there will probably be parts that will rebound faster (SW) and parts that will rebound slower (the Rust Belt).
So what does this mean for the housing market?
- The recovery will be slow.
- Any stimulus plan that aims on encouraging a resumption of the “old” spending and use of credit is destined to only prolong the downturn. Instead we need to promote the use of credit wisely and encourage smart borrowing.
Part #2 will be here on Monday.
What do you think?
Now this is good news……
by Tom on November 25, 2008
in Market Musings
NEWSWEEK: What are your thoughts on the team Obama assembled?
Nouriel Roubini: The choices are excellent. Tim Geithner is going to be a pragmatic, thoughtful and great leader for the Treasury. He has experience at the Treasury and the IMF [International Monetary Fund], then the New York Fed. I have great respect for both Geithner as well as Larry Summers. I think both of them in top roles in economics in the administration were good moves. I think very highly of them both.
Calculated Risk: Roubini: Geithner and Summers “Excellent Choices”.
Dr. Roubini has a reputation as:
- One of the most accurate economists in the last 5 years.
- One of the most negative econommist in the last 5 years.
So when he says that Geithner and Summers are good people for a tough spot, that makes me feel a bit better.
Are we having a Happy Wednesday?
by Tom on November 19, 2008
in Market Musings
If you are, then one of two things:
1. Watch what Dr. Roubini says and your Happy Wednesday will turn into a sad Thursday.
2. Don’t watch and keep having a Happy Wednesday.
But remember, Dr. Roubini has a pretty consistently accurate track record when everyone (well almost everyone) has been saying that it’s not that bad.
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If this guy was wrong more, I’d write him off as a nut….
“Systemic risk has become bigger and bigger,” Roubini said at the Hedge 2008 conference. “We’re seeing the beginning of a run on a big chunk of the hedge funds,” and “don’t be surprised if policy makers need to close down markets for a week or two in coming days,” he said.
But Dr. Roubini has rung up an impressive record in the last 3 years about the credit crisis.
The markets shut down for a week or two? That would certainly make for historic times……
Tom
Little Sign of Relief in Interbank Markets Despite Massive Intervention – is it still just the 4th inning?
by Tom on October 14, 2008
in Market Musings, banks
Although the stock market has taken considerable cheer from the monumental action by central banks to try to restore interbank lending to something resembling normalcy, the results to date have been meager. However, hope remains that improvement will continue, albeit at a slow pace.
An explanation for this conundrum may come from Nouriel Roubini via Bloomberg (hat tip reader Dwight):
Roubini said total credit losses resulting from the meltdown of the subprime mortgage market will be “closer to $3 trillion,” up from his previous estimate of $1 trillion to $2 trillion. The International Monetary Fund estimated $1.4 trillion on Oct. 7. Financial firms have so far reported $637 billion in losses, according to data compiled by Bloomberg
If you take Roubini’s forecast to heart, we are less than a quarter of the way through this crisis, but even based on the less alarming IMF forecast, we have yet to reach the half-way point.
via naked capitalism: Little Sign of Relief in Interbank Markets Despite Massive Intervention
A few thoughts about this:
1. The stock market is breathing a sigh of relief this week that things are going better.
2. The credit markets really aren’t doing very well yet and as anyone who has checked mortgage rates would know, it’s showing up in mortgage rates too.
Yes, I think that it’s really only the 4th inning on this. I’ve been saying the bottom of the fourth inning for quite some time, so it isn’t moving very rapidly.
