(Nouriel) Roubini Now Says The Worst Of Economic Crisis Is Over

[sabra]

Source: CNBC

Nouriel Roubini, the economist whose dire forecasts earned him the nickname "Doctor Doom," is now saying that the worst of the economic and financial crisis may be over.

The New York University professor was quoted by Reuters on Thursday as saying that the economy would emerge from the recession toward the end of 2009.

His comments helped trigger a late rally in the stock market.

Roubini still warned that the US may need a second fiscal stimulus package of up to $250 billion by the end of the year to boost the deteriorating labor market, Reuters reported.

The stimulus "cannot be too small, but it cannot be too large," Roubini said, or financial markets will become too worried about the sustainability of the U.S. debt.

Roubini, of RGE Global Monitor, is one of the few economists who foretold much of the current financial turmoil. But until now, he has remained pessimistic even amid signs that the economy was beginning to turn.

Read more: http://www.cnbc.com/id/31947275

[ingac70]

1. Why would we need a second stimulus....

when they haven't even spent the first one?

[northernlights]

7. the 1st one didn't focus enough on job creation

and the 1st one was based on a worst-case forecast of unemployement reaching 9%. It is at 9.5% and rising. Most economists predict now that it be at 10%.

Aside from the very real, human toll of job (and then home) loss, if unemployment is not staved off, then the economy will not recover. No income means no spending.

There is a slight uptick...I've managed to net 2 job interviews this week:

One is minimum wage at Dunkin' Donuts and will drastically cut into my re-education, so could put me long term in worse shape than I am now. Certainly it won't increase my spending...I'm buying absolute essentials only.

The second one is 50% better pay, but the hiring consultant made clear in my phone interview this morning that they have had *hundreds* of applicants for a single fulltime and single halftime opening.

[Oregone]

18. Because we haven't even spent the first one yet

It takes forever for allocated money to be injected in the system. The longer you wait, the less that will overlap the existing spending for the sufficient boost that is needed.


By my suggestion of a sufficient boost being accomplished by overlap, you can ascertain that the current stimulus, as written, is insufficient. The current stimulus was written for an economy with 8% unemployment, but their projections were wrong and its 9.5% and climbing. A corrective adjustment to the numbers is needed to fill the gap.


The reality is that the first stimulus was an arbitrary number (somewhat based more on politics than economics). What is somewhat objective is the current unemployment, which is a dead giveaway that the first stimulus was too small. But, there is no reason to believe an arbitrary number picked months ago based on faulty projections is the magic amount needed to combat deficient demand.

[Pirate Smile]

2. Bad news for the people who seem to be really invested in failure.

Good news for the rest of us. :)

[Zenlitened]

16. See:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3972031#3972201

Are you of the view that the victims of Katrina were "invested in drowning"? :shrug:

[Pirate Smile]

19. What a straw man. There is a group of posters who seem to want things to get worse, not better.

I'm talking about them.

[Joanne98]

3. Who's holding his children hostage?

Just kidding. Over for WHO? Not us.

[Grinchie]

20. I was thinking the same thing.. I wouldn't be surprised if he has joined the "Club"

I'm going to take this story with my usual cynicism, because the fundamentals are not there. We are now entering a delicate phase in the Third Wave of foreclosures, and the Job Market is depressed, yet prices remain high, which is not in sync with reduced wages, reduced demand, etc, etc, etc. Alternatively, the Housing market IS behaving normally, and prices are dropping like a rock, and new REO's pop up weekly, So housing remains in a deflationary cycle, and it appears to be accelerating into the 3rd and 4th quarter.

It amazes me to see comments such as "Bad news for those invested in failure" above. Lurker talk to demean those that can see the fraud for what it is, without offering any information at all. Their Karma will come back to haunt them at a later date.

In the meantime, I've had 6 years to watch the economy, identify the real drivers, and learn to spot the Happy Puppy storys that the media is so good at planting in our minds. It's a full time job! There is no way I could keep up if I worked a regular job in a cube somewhere, and that's why I think that Americans are so gullible.

[ORDagnabbit]

4. ROTFLMAO!!!! ahhah ahhahha... right....

[Renew Deal]

5. OK, how is he wrong...

:shrug:

[ORDagnabbit]

6. some of the things to research

M3
derivatives
foreclosure rates
unemployment rates (the real numbers...not the government happy pill numbers)
Port numbers
bankruptcy numbers

I'm at work but some basic leg work will get you the idea of how truly screwed we are and how bad the next 2-3 years will get.

[ORDagnabbit]

8. heres a few links

http://www.polb.com/economics/stats/latest_teus.asp

http://finance.yahoo.com/news/Foreclosures-rise-15-percent-apf-516022846.html?x=0&sec=topStories&pos=4&asset=&ccode=

http://www.federalreserve.gov/releases/g17/Current/default.htm

http://en.wikipedia.org/wiki/Money_supply
http://www.shadowstats.com/alternate_data/money-supply

[Grinchie]

21. Thanks for a few extra links to add to my favorite links.

[truedelphi]

15. Keep us informed. n/t

[Javaman]

9. So...when did he start doing stand up? nt

[OhioChick]

10. Yeah, right.

:eyes:

[Hugabear]

11. He may be absolutely right - but not for the vast majority of us

I'm sure that Corporate America will begin to emerge. But not the rest of us. Not us vassal citizens. Corporate America will depend more and more upon cheap labor overseas, which will help improve their profits. The rest of us will continue to scrounge by on whatever scraps fall from the dinner table.

[galileoreloaded]

12. For the Presidential Economic Team sponsored by GoldmanSachs, maybe

for you and me??? You ain't seen nothin' yet.

[Hydra]

13. Right...

Goldman and JP post major profits they screwed out of us, and suddenly the hungry beast is done? I don't think so...

[Zenlitened]

14. Roubini: "My views were taken out of context"

Guess he's still "invested in failure," huh? :eyes:

“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.

(snip)

“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.

(snip)

“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 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...

http://www.rgemonitor.com/roubini-monitor/257299/roubini_statement_on_the_us_economic_outlook

[Grinchie]

22. Ouch, Plus CNBC changed the Headline too!

it now reads:

Roubini: Views on Economy Unchanged Despite Reports

I wonder who would have profited from that "Late in the Day" phony story that was originally published. Perhaps this is a job for the zombies at the SEC, or maybe the DOJ.

[girl gone mad]

17. It always amuses me that the headlines on Roubini-related pieces..

never seem to match his actual commentary.

From today's report:

In the next few months, unemployment may reach 11 percent in the US and around 10 percent in Europe, Roubini said. Because of bad macroeconomic data and poor earnings prospects as companies have weak pricing power and demand is still subdued, the surprises will be on the downside, he told CNBC.

"That's why I believe there's going to be a significant market correction for equities, for commodities and even for credit," Roubini added.

Doesn't sound all that positive, does it?

I've been reading Roubini for years. I would say that in recent months he's been coating the gloom in layers of optimism, but if you take the time to parse his analysis, he is still the same Dr. Doom at heart.

[dgibby]

23. He says his comments were taken out of context.

See this:http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3972225

[Psephos]

24. Recovery will come, sooner or later...perhaps at year's end...but it will be jobless

In any recession, employment is a lagging, not leading indicator. And this isn't just any recession.

High unemployment will keep consumer spending meager, and in an economy that's 70% based on consumer spending, that means an anemic recovery and no serious relief in sight for millions with no job. It will take years to chip away at just the number of jobs lost this year, let alone to show growth.