America’s economy risks mother of all meltdowns

[Amerigo Vespucci]

Source: Financial Times

“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.” Alan Greenspan, The Age of Turbulence.

That used to be Mr Greenspan’s view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this question we should ask a true bear. My favourite one is Nouriel Roubini of New York University’s Stern School of Business, founder of RGE monitor.

Recently, Professor Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*. At that time, his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.”

Prof Roubini is even fonder of lists than I am. Here are his 12 – yes, 12 – steps to financial disaster.

Read more: http://www.ft.com/cms/s/0/4d19518c-df0d-11dc-91d4-0000779fd2ac.html?nclick_check=1

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[Kolesar]

1. "ask a true bear"

slit wrists lengthwise

[Javaman]

13. crosswise you just make a mess and look like a boob. nt

[Xenotime]

2. This is going to be bad.

[NJCher]

3. YEP

reserve your cardboard box (new home) now.



Cher

[octobit]

4. Wise Investment

Bush's tax relief of $800 is just about enough to purchase an ounce of gold. Financial groups generally plan a few years in advance for what they expect will happen. From a glance over at the laptop of a man I shared a flight with, I have gleamed that they are preparing for "the crash of 2010." I don't know exactly how severe that crash is expected to be, all I know is that it is expected.

[Delphinus]

14. Seriously??!!

What did you see? Who are 'they'? Who is expecting it? How, truly, can this crash wait two more years?! Was it entitled the "crash of 2010"?

[Alcibiades]

5. Deep doo doo

Those charts are a little misleading. The first one lacks a true zero point, which is to say that what ought to be a zero point is 1.2%. This gives the impression that it graphs a bigger drop than it does. Both charts are (except for the line showing the value of house sales over time) also graphs of change, which alaso exaggerates the actual change in the real variables of interest.

I had thought that 20 years of cutting taxes on the rich would mean that we would be recession-proof. I guess "supply-sde" economics does appear to be what Bush senior called it: Voodoo economics. That's wrong too, actually, because at least sometimes voodoo gets results.

I've been predicting a global depression for 20 years, so I'm more of a bear than Roubini. We will know when it has finally arrived when the financial markets panic.

[nodehopper]

6. could you post the text here? it requires registration and bugmenot is not working

[Viva_La_Revolution]

9. here's a link to the full article...

http://news.yahoo.com/s/ft/20080219/bs_ft/fto021920081334359078;_ylt=AozoX8V3CwKFRV6c_RfR1f0E1vAI

:)

[SpiralHawk]

7. Let history record this correctly: "The Republicon Recession."

"We've got OURS already in Swiss Bank Accounts, and in Paraguay, too. Ha ha. I'll be out of here before the republicon shit really hits the fan. Smirk, Smirk, Smirk."

- Commander AWOL

[radfringe]

8. sadly if the 2010 projection is correct

and a Dem is in the white house - it will be blamed on them - doesn't matter if it's roots were in the "republican bushes"

there will be spin which grudgingly recognizes the 'roots' - but the spin will then become "yeah, but why didn't the dems do anything to stop it when they knew it was coming?"

and therein lies the rub - vote republiCON so the crap lands on them, or vote DEM and hope they can turn it around for the better?

[katty]

11. yup, it's setup that way...always blame the Dems

here comes Disaster 2009

[Hydra]

10. It's a vicious feedback loop

it could be stopped tomorrow, though, so it's a deliberate mess done with purpose.

We'll just have to wait and see what that purpose is.

[Diclotican]

12. Amerigo Vespucci

Amerigo Vespucci

So long mr Bush and the right wingers are not in the "bad end" of things it do not bother them.. If 98 prosent of the people are in shambles.. Well sorry for them... If they just profit for it, and get out before the meltdown..

And so long it is the Dem who are given the blame for the economical meltdown who may come.. Then the Reps would be in position again.. The media would be so happy to get the Reps one chance to screw it up... So long Dems are to be blamed..

Diclotican

Sorry my bad English, not my native language

[DeeDeeNY]

15. Scary

Iraq War has been good to Halliburton but not so much to the rest of us