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The Danger of Roubini
Nouriel Roubini is now seen as the expert on the current economic state of emergency in the US and the world. His analysis is alarming, mostly right, and extremely dangerous for progressives. It's easy to drift into despair and hopelessness, and that is what Roubini has done. His analysis and predictions for the future could not be bleaker. If you truly took him at his word you might as well go hang yourself right now, because the earth is on fire and hopelessness rules.
Progressives must stand up, take charge, show leadership qualities, be warriors against cynicism and despair, and fight for a better future. Roubini thinks in terms of GDP, LIPOR, TARP, deleveraging, etc, etc. None of it adds up for him, we are doomed, and there is nothing we can do.
Beware. He's got an axe to grind.
Progressives must stand up, take charge, show leadership qualities, be warriors against cynicism and despair, and fight for a better future. Roubini thinks in terms of GDP, LIPOR, TARP, deleveraging, etc, etc. None of it adds up for him, we are doomed, and there is nothing we can do.
Beware. He's got an axe to grind.
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He is one of the perennial doomsayers that hung around long enough to see the beginning of another bubble collapse. He joins Ravi Bhatra and a host of others in that dubious category.
Now he is at "Defcon One" and crowing about his predictions about market closures.
It didn't take too much wizardry to pull off that prediction.
I have said before that NR needs to take a chill pill or three but it should be said again. He is getting enough press and attends enough conferences to be a factor in contributing to the nervousness here and abroad.
One thing he is dead right about: the hedge funds are in trouble. Some of this weeks turbulence may have been asset sell-off by hf's trying to meet redemptions. Darwinian forces rule the market and those funds were like life forms that evolved without any way to deal with a change in climate.
October 24, 2008 11:35 PM | Reply | Permalink
Talk about the financial side seems to make us all feel powerless, probably because it's usually discussed in terms of billions of dollars being moved around by shadowy organizations with which we have no direct contact.
The real economy is where I tend to focus, and things don't look too dandy there. I don't see much of a way forward without a serious revamp there - even if the financial ship is righted. But on that side at least, there are things we can do - both politically & personally. The problem here seems to be that our present political debate doesn't offer much. Another round of fiscal stimulus? $1,000 tax breaks? Even at their best, this isn't offering much more than faint hopes of reinflating the same machine. Ech. Lotta work coming.
October 25, 2008 1:02 AM | Reply | Permalink
Quinn, the real economy is, up to a point, insulated from the enormous volatility in the financial sector, but since our economy doesn't have the equivalents of rubber shock-absorbing bumpers between the cars of the train, shocks in the caboose are transmitted to the engine.
So, eventually the real economy does suffer. China is going to launch an all-out attempt to get the USD replaced as the world's reserve currency...they have seen their market decline almost 70%. If they are successful, and they won't be since the EU has to agree, we would see some drastic changes here.
More likely we will be in doldrums for a long while but with a recovery starting in Q3 2009. Jobs however (the real economy) are going away and will not return. This is a very very bad thing for Main Street. We may ratchet our permanent unemployment figure up to double digits. Very sad. Still the bulk of purchasing power will sail through this crisis intact and we won't see a Great Depression II.
Lux's Poor Man's Market Service
October 25, 2008 10:28 AM | Reply | Permalink
Quinn, I forgot to add this:
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4062
look at paper 666. Some disconnects between the financial meltdown and the commercial paper borrowing mechanism...a good thing actually.
October 25, 2008 10:29 AM | Reply | Permalink