Nouriel Roubini sees doom if GOP takes power

Prof. Nouriel Roubini was one of only a very few national economists who accurately predicted the housing meltdown and resulting deep recession. A professor of economics at New York University, Roubini has been described as "a prophet" at the IMF and was rated number 4 in Foreign Policy journal's Top 100 Global Thinkers.

In an opinion piece for the Financial Times, Roubini credits the Obama administration's stimulus plan with preventing another Great Depression.

However he warns that if Congress becomes dominated by the Republicans as some are predicting, we could be headed for more economic gloom.

He said the U.S. remains on an "unsustainable fiscal course" and the likely make-up of Congress after elections next Tuesday, in which the Republicans look set for strong gains, virtually takes fiscal reform off the agenda.

The resulting instability could be aggravated by a trigger mechanism according to Roubini including a state government going into debt default.

"The worst of the coming fiscal train wreck will be prevented by the Fed's easing. But the risk is (Obama) ... will then preside over ... a Japanese style stagnation, where growth is barely positive, and deflationary pressures and high unemployment linger."

Reading over the GOP "Pledge to America," one is hard pressed to find any fault in Roubini's reasoning.  The Republicans are basically promising the same types of economic strategies that got us into this mess in the first place.

Obama: Not a "run-of-the-mill recession"

President Barack Obama last night described the economic malaise as "not your ordinary, run-of-the-mill recession."

They might be a bit of an understatement. The economists that accurately predicted the recession sometimes with remarkable detail and timing see a very rocky road ahead. Analysts like Nouriel Roubini, Max Keiser, Nassim Taleb, Peter Schiff and others all see the same signs of gloom.

Debt and leveraging is still the main underlying problem. Because of the credit crunch this is easing up among consumers and businesses, but government is making up for this somewhat by borrowing trillions of dollars. It's difficult to predict how large the federal deficit will be before the year is out.

The job market is the worse its been since the Great Depression. Not only half a million job cuts a month but record numbers of companies initiating a hiring freeze to cut costs.

The housing meltdown is still a major problem. People continue to lose their homes depressing prices. Roubini thinks prices must fall by about 40 percent before bottoming out.

Despite an injection of $350 billion into the credit markets over the winter, the credit market is still frozen. No one really knows for sure how much it will take to deleverage. Nouriel Roubini thinks it will take $3.5 trillion over what has been appropriated thus far.

Companies are cutting back as much as 20 percent in new spending.

Washington Post
Obama: Not a 'Run of the Mill' Recession
ABC News - 19 hours ago
... which he called "not your ordinary, run-of-the-mill recession." President Barack Obama answers a question during his first prime time televised news ...
Video: Obama brutally changes his tone france24english



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