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Thread: Roubini Predicts Trouble for the Economy in the Future.

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  1. #1
    Havakasha is offline
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    Roubini Predicts Trouble for the Economy in the Future.

    Notice the difference between how Mr. Schiff talks and Mr. Roubini talks.
    Mr. Roubini doesnt make the kind of outlandish specific calls (catastrophic stock market crash
    in Jan. 2011, 10 year treasury's at 6% in 2011, or hyperinflation in 2011. Nor does he say that
    either the Dow will sink to 1,400 or gold will rise to $12,000) in this article that Mr. Schiff makes
    Its a much more nuanced discussion about worldwide economics without the extreme reckless
    predictions and statements.

    Economist Nouriel Roubini predicts trouble ahead for economy

    Nouriel Roubini, co-founder of the economic strategy firm Roubini Global Economics in New York, is worried about the so-called fiscal cliff the United States is facing at year's end. I caught up with Roubini to talk economics, Europe and that fiscal cliff. Our interview follows, edited for clarity and length.

    One on One
    By Maria Bartiromo
    By Jonathan Alcorn,, Bloomberg News
    Nouriel Roubini

    Q: Where are we in the economic recovery?
    A: There is an overall slowdown of global growth. Europe is in a recession in the periphery countries, and it's getting worse. There is a double-dip recession in the United Kingdom, sluggish growth in Japan, and the data from many emerging markets are also suggesting a slowdown in China, Russia, Brazil, India and places like Turkey, Mexico and South Africa.
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    Q: What about the U.S.
    A: We have positive economic growth, but it's below trend — barely 2%. Job creation is still anemic. The recovery is still anemic because the painful process of de-leveraging has not even started in the public sector. And next year there will be some fiscal drag because of the fiscal cliff that's coming up.
    Q: Explain what you mean by fiscal cliff.
    A: Many things are expiring at year end. All the tax cuts on income, on dividends, on capital gains, on estates. There's an expiration of the payroll tax (cut). There is a reduction or expiration of transfer payments to state and local governments, to unemployment benefits. There is the expiration of infrastructure spending, and then there are the automatic cuts on discretionary spending, which came about because we failed to reach an agreement for reducing the budget deficit.
    The point is, all this is expiring at year end, and the hole will be $600 billion, or about 4% of GDP, and then we plunge into a nasty recession. Now, some items may be continued (if the Republicans and Democrats can agree to extend) but a realistic assessment is a fiscal drag. Even if the cliff is not a free fall because some items won't expire in an agreement, there will still be the beginnings of a fiscal drag, because you reduce disposable income by raising taxes, and (by) cutting transfer payments, you reduce aggregate demand by reducing government spending.
    Q: What about Europe?
    A: The European recession is getting worse. There's fiscal austerity that, in the short run, makes the recession worse. Second, the value of the euro is too strong for the countries on the periphery that have lost competitiveness. Third, you have a credit crunch because the periphery banks don't have enough capital, and they will be forced to cut credit. Fourth, you have the effects of high oil prices, and Europe depends 100% on oil imports. And now politics in Europe are an issue, as we saw from the Greek elections, French elections, the Italian elections and German elections, and the collapse of the government in the Netherlands.
    Q: Wow. How long will this sustain?
    A. You have on one side austerity fatigue, because these countries are finding that austerity makes the recession worse. The austerity fatigue is spreading to France and the Netherlands. On the other side, you have bailout fatigue in places like Germany or Finland or Austria. These Germans tell me, 'These Greeks have a big fat Greek wedding not for a weekend, but for the last 20 years. We give them one bailout, then a second bailout. We cut their foreign debt by 75% in the debt restructuring, and they still don't want to do any fiscal austerity and structural reforms.' So they say, 'Enough is enough, let's pull the plug.' "
    Q: What will happen to Greece?
    A: The risk is that you'll have Greece exiting the eurozone with all the collateral damage. Also the risk is that many other countries will find it difficult to do austerity. There is a significant sociopolitical and policy uncertainty in Europe that affects the global markets. So, to me, the eurozone looks like a slow motion train wreck. Slow motion is not going to collapse overnight. But Greece is not going to be the only country that's going to restructure. Greece by next year might exit the eurozone. If one or two of the smaller countries restructure their debt and exit, like Portugal or Cyprus, the eurozone survives. But if the contagion spreads through Italy and Spain, the third- and fourth-largest economies, it could lead to a breakup of the eurozone three or four years down the road.
    Q: So, how does all of this affect the U.S.?
    A: First, there is huge exposure of U.S. companies to Europe because they have factories and businesses there. If Europe goes into recession, the profits of these multinationals are cut. About half of all the profits of U.S. S&P 500 firms are coming from their foreign operations, many of them in Europe. Second, whenever there is risk of disorderly financial conditions in Europe, there is not just a sharp correction of European stock markets, but also of U.S. markets. When Greece was first in trouble in the spring of 2010, you had a 20% correction in the European stock market, and a similar correction in the U.S., in Asia, in emerging markets. Same thing last year between August and October. So financial contagion becomes instantaneous because of sentiment, exposure of U.S. financial institutions to European ones, and because of these links between the U.S. businesses and their own activities in Europe. No country is an island.
    Q: What are you expecting from the markets in the next year and how do you invest in the face of this?
    A: We see it being flat for the rest of the year, like it was flat last year, given all these uncertainties and given there is a fiscal cliff and there is more gridlock. I don't expect the stock market to tank this year. But I don't see, from current levels, much upside. The emerging markets are a long-term story. Their growth rate in the long run is 6%, while in advanced economies (including the U.S.) is 2%, 2.5%. So if you are willing to invest for the long run, yes on emerging markets. But if you're thinking about what's going to happen in the next few months, no country is an island.

  2. #2
    Havakasha is offline
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    CBO Report Says Deficit Reduction Will Cause New Recession
    Posted: 05/22/2012 9:10 pm

    A new government report said spending cuts scheduled to go into effect in 2013, coupled with the simultaneous expiration of Bush-era tax cuts, will shrink the U.S. economy and raise unemployment -- contradicting the Republican claim that reducing the federal budget deficit will spur economic growth.

    The Congressional Budget Office report, released on Tuesday, estimated that the policies slated to kick in on Jan. 1 would slash the deficit and shrink the national economy by 1.3 percent during the first half of next year, likely throwing the country over a "fiscal cliff" into another recession.

    If left in place, the current policies would reduce the federal deficit by $607 billion, or 4 percent of gross domestic product, the report said. That reduction, from immediate tax increases or spending cuts, would "represent an added drag on the weak economic expansion," the CBO noted in its report.

    "The resulting weakening of the economy will lower taxable incomes and raise unemployment, generating a reduction in tax revenues and an increase in spending on such items as unemployment insurance," the report said.

    The CBO report offers a stark contrast to a standard Republican argument. While Republicans frequently target President Barack Obama for the approximately $5 trillion increase in federal debt since he took office in 2009, this report suggested that rapid deficit reduction would cause short-term harm to the economic recovery.

    Keep reading by clicking on link.

  3. #3
    Havakasha is offline
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    A giant austerity bomb is timed to go off at the beginning of next year, and the threat of significantly higher taxes and lower spending has Republicans running around the Capitol sounding more like John Maynard Keynes than John Boehner.

    Automatic, across-the-board reductions to domestic and defense spending, combined with the looming expiration of the Bush tax cuts, will dramatically consolidate the budget in the next calendar year, if Congress does nothing. And despite bemoaning deficits throughout the Obama years, the GOP’s suddenly come around to the view that cutting government spending is a job killer.

    Just listen to Sen. John Cornyn (R-TX).

    “Just when you thought the economic news could not get much worse with slow economic growth, with reduced wages because of higher costs, and with many people simply giving up looking for work with the lowest labor participation rate we’ve had in some time,” Cornyn warned reporters in the Capitol Tuesday, “we have an entirely predictable and preventable jobs crisis approaching in January, where because of the sequestration [automatic spending cuts], my state alone will lose 91,000 private sector jobs — and there are about a million private sector jobs at risk if the sequestration goes into effect on January 2.

    This marks the return of the Defense Keynesians — Republicans who admit that government spending supports job growth in a weak economy, if and only if that spending is directed toward the military.

  4. #4
    SiriuslyLong is offline
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    Roubinii is a charlitan. Dr. Doom. And he has been wildly wrong...... No credibility lol.

  5. #5
    Havakasha is offline
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    Did you agree or disagree with THIS particular article of his? Just curious.

    Did Roubini predict that there would be a "catastrophic" stock market crash in jan. 2011? Did he predict that 10 year treasury's would rise to 6% in 2011? Did he predict HYPERINFLATION in 2011? Did he predict that the Dow would fall to 1,400 or gold would rise to $12,000 in the next year and a half?

    The answer is NO. But Mr. Schiff sure did. Unbelieveable. Anyone putting faith in someone so wrong so many times is a fool.
    Last edited by Havakasha; 05-24-2012 at 11:04 AM.

  6. #6
    Havakasha is offline
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    Did Roubini say this in 2008? Nope. It was none other than mr. Schiff.

    "Oil prices had a pretty big run and might not make more headway by the end of the year. But we could see $150 to $200 next year." "At a minimum, the dollar will lose another 40 to 50 percent of its value."

    Schiff is a well-known bear who predicted in 2008 that the dollar will collapse amid hyperinflation That did not happen, and the dollar strengthened against most major currencies by the end of 2009.

    Notice the pattern. He predicts hyperinflation just about every year so if it were to
    ever happen, he would say, see I was right. lol.
    You can only shake your head in embarassment.
    Last edited by Havakasha; 05-24-2012 at 01:50 AM.

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