The remedy of cash injections isn't motivating banks to loan to consumers or other banks, as advertised. The treasury is not pushing banks to write down. Banks will hoard the money and plug their own holes. TED spread remains high.
Nouriel Roubini on Charlie Rose last night.
Showing posts with label Nouriel Roubini. Show all posts
Showing posts with label Nouriel Roubini. Show all posts
Friday, October 17, 2008
Tuesday, October 14, 2008
Nouriel Roubini: Precise predictor
Nourial called this crisis, exactly, years ago. He was shunned. Now, he's the most in demand economist in the US. He's on Bloomberg video here. His opening line is right out of Silence of the Lambs. He's part Turkish-American, part Hannibal Lector, NYU.
He is asserting thus:
The $250 billion bank recapitalization is only the beginning. The government will soon have to re-up (because it hasn't dealt with the huge writedown problem), and it will eventually have to take a much more active role in bank management. Otherwise, we'll just have a plague of zombie banks, like Japan.
House prices will fall 40%, worse than the Great Depression. (Sounds horrifying, but we're more than halfway there).
Worst recession in 40 years, now projected to last 18-24 months.
Stock market rally will sputter
Economy is "really tanking"
Total bank losses from crap debt will be "closer to $3 trillion" (up from previous estimate of $1-$2 trillion). This compares to about $650 billion of writeoffs so far.
Source.
He is asserting thus:
The $250 billion bank recapitalization is only the beginning. The government will soon have to re-up (because it hasn't dealt with the huge writedown problem), and it will eventually have to take a much more active role in bank management. Otherwise, we'll just have a plague of zombie banks, like Japan.
House prices will fall 40%, worse than the Great Depression. (Sounds horrifying, but we're more than halfway there).
Worst recession in 40 years, now projected to last 18-24 months.
Stock market rally will sputter
Economy is "really tanking"
Total bank losses from crap debt will be "closer to $3 trillion" (up from previous estimate of $1-$2 trillion). This compares to about $650 billion of writeoffs so far.
Source.
Saturday, October 4, 2008
Nouriel Roubini: He was Right
The US government should hire Nouriel on a permanent retainer... I get him cheaply here.
"NYT: On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.
The audience seemed skeptical, even dismissive. As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, “I think perhaps we will need a stiff drink after that.” People laughed — and not without reason. At the time, unemployment and inflation remained low, and the economy, while weak, was still growing, despite rising oil prices and a softening housing market. And then there was the espouser of doom himself: Roubini was known to be a perpetual pessimist, what economists call a “permabear.” When the economist Anirvan Banerji delivered his response to Roubini’s talk, he noted that Roubini’s predictions did not make use of mathematical models and dismissed his hunches as those of a career naysayer."
"NYU professor Nouriel Roubini, PIMCO bond guru Bill Gross, and Invesco strategist Diane Garnick all think that banks will have to write off $1 trillion of losses before the credit crash is through (and Diane and Nouriel think this is a floor)."
"NYT: On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing. In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.
The audience seemed skeptical, even dismissive. As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, “I think perhaps we will need a stiff drink after that.” People laughed — and not without reason. At the time, unemployment and inflation remained low, and the economy, while weak, was still growing, despite rising oil prices and a softening housing market. And then there was the espouser of doom himself: Roubini was known to be a perpetual pessimist, what economists call a “permabear.” When the economist Anirvan Banerji delivered his response to Roubini’s talk, he noted that Roubini’s predictions did not make use of mathematical models and dismissed his hunches as those of a career naysayer."
"NYU professor Nouriel Roubini, PIMCO bond guru Bill Gross, and Invesco strategist Diane Garnick all think that banks will have to write off $1 trillion of losses before the credit crash is through (and Diane and Nouriel think this is a floor)."
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