Comments on: Roubini On U Shaped Recovery: More Statesmanlike or Less Certain? http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html Mon, 22 Mar 2010 14:31:51 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: Dr. Doom Forecasts… Well, Um… Doom « Around The Sphere http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-55878 Dr. Doom Forecasts… Well, Um… Doom « Around The Sphere Tue, 15 Sep 2009 19:52:50 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-55878 [...] Naked Capitalism: Nouriel Roubini verged on apocalyptic during the course of the crisis, and was proven largely right. Now that he has softened his stance, some have accused him of moderating his tone as a result of his much higher profile. [...] [...] Naked Capitalism: Nouriel Roubini verged on apocalyptic during the course of the crisis, and was proven largely right. Now that he has softened his stance, some have accused him of moderating his tone as a result of his much higher profile. [...]

]]> By: Fernando08 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53587 Fernando08 Tue, 25 Aug 2009 01:42:52 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53587 The Soviet union unraveled when Gorbachev, realizing the economic truth for the first time, laid off 500,000 of the Red Army. It had no capacity to pay them, feed them, house them etc. It was a unilateral decision seeking no quid pro quo from the Western Bloc. Our Wall Street has finally collapsed but our current military budget, for this year alone, is $687B. That is almost as much as the much maligned, too much to spend too fast, and more than we can read and vote on in so short a time stimulus package. These huge amounts are passed annually with no review, tea party protests, or town hall gun rallies. Gee, I wonder why? We can not support our conspicuous consumption of military power, which is well prepared to face down the Warsaw pact in the biggest tank battle ever or darken the skies of Moscow with thousands of jet fighters superior to the MIG air wings of 1985. I do not think it is too much to ask to declare victory in Europe, abandon the defense of the ski slopes of the Alps and let our service men and women spend their pay checks in the lower forty eight states. The military bubble grows unabated, sacrosanct and unlike health reform or financial manipulation of zero sum games causes a structural deficit and misallocation of resources on a magnitude greater than the most recent housing bubble. Which brings me to questions about recovery real or imagined. If bringing into the fold 47 million uninsured will be a huge windfall for the entire medical sector and most of its suppliers, what would happen if the comparable group of structurally unemployed and underemployed were brought into the economy by continued stimulus programs over the next 7 years? It would be similar to bringing on board 2 new states the with combined populations of Pennsylvania and California. Demand needs to be generated from somewhere and with the scale of America, at 300,000,000 we need to keep bringing people into the middle class by virtue of income and consumption or face periodic social upheavals when financial problems like the current one come up. It can take decades to overcome the devastation of the economic collapse of older urban areas. I do not anticipate great reform now from Washington directed at Wall Street and banking in general. I thinks the Democratic base is going to be taken care of with health care reform, in order to garner an untouchable and insurmountable political base from which to assault entrenched special interests of an organized oligarchy. While I respect your financial analysis, I do not see any firm understanding that the social order as a whole is the platform for the economy and financial organizations. The political economy of the nation-state can not be allowed to unraveled due to shareholder rights. Their rights will be gone with the wind without the nation-state and the social order it provides to protect and uphold them. The Soviet union unraveled when Gorbachev, realizing the economic truth for the first time, laid off 500,000 of the Red Army. It had no capacity to pay them, feed them, house them etc. It was a unilateral decision seeking no quid pro quo from the Western Bloc. Our Wall Street has finally collapsed but our current military budget, for this year alone, is $687B. That is almost as much as the much maligned, too much to spend too fast, and more than we can read and vote on in so short a time stimulus package. These huge amounts are passed annually with no review, tea party protests, or town hall gun rallies. Gee, I wonder why? We can not support our conspicuous consumption of military power, which is well prepared to face down the Warsaw pact in the biggest tank battle ever or darken the skies of Moscow with thousands of jet fighters superior to the MIG air wings of 1985. I do not think it is too much to ask to declare victory in Europe, abandon the defense of the ski slopes of the Alps and let our service men and women spend their pay checks in the lower forty eight states. The military bubble grows unabated, sacrosanct and unlike health reform or financial manipulation of zero sum games causes a structural deficit and misallocation of resources on a magnitude greater than the most recent housing bubble. Which brings me to questions about recovery real or imagined. If bringing into the fold 47 million uninsured will be a huge windfall for the entire medical sector and most of its suppliers, what would happen if the comparable group of structurally unemployed and underemployed were brought into the economy by continued stimulus programs over the next 7 years? It would be similar to bringing on board 2 new states the with combined populations of Pennsylvania and California. Demand needs to be generated from somewhere and with the scale of America, at 300,000,000 we need to keep bringing people into the middle class by virtue of income and consumption or face periodic social upheavals when financial problems like the current one come up. It can take decades to overcome the devastation of the economic collapse of older urban areas. I do not anticipate great reform now from Washington directed at Wall Street and banking in general. I thinks the Democratic base is going to be taken care of with health care reform, in order to garner an untouchable and insurmountable political base from which to assault entrenched special interests of an organized oligarchy. While I respect your financial analysis, I do not see any firm understanding that the social order as a whole is the platform for the economy and financial organizations. The political economy of the nation-state can not be allowed to unraveled due to shareholder rights. Their rights will be gone with the wind without the nation-state and the social order it provides to protect and uphold them.

]]> By: Fred http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53586 Fred Tue, 25 Aug 2009 01:12:55 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53586 screw the social safety net. Its just an excuse to eat away at our freedoms.<br /><br />You liberals should just quit being sissies and accept reality. screw the social safety net. Its just an excuse to eat away at our freedoms.

You liberals should just quit being sissies and accept reality.

]]> By: "DoctoRx" http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53576 "DoctoRx" Mon, 24 Aug 2009 16:59:45 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53576 "Growth" is not everything, though the MSM including Dr. Roubini speak of it as if it were the Holy Grail.<br /><br />Surely such a rich country as the U.S. can afford a few years of no growth while it gets its financial sector and the rest of the economy in better balance. A strong social safety net is needed, but not a safety net for the financial gamblers. "Growth" is not everything, though the MSM including Dr. Roubini speak of it as if it were the Holy Grail.

Surely such a rich country as the U.S. can afford a few years of no growth while it gets its financial sector and the rest of the economy in better balance. A strong social safety net is needed, but not a safety net for the financial gamblers.

]]> By: Jim Q http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53570 Jim Q Mon, 24 Aug 2009 15:04:50 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53570 The Fed must die before we can have a stable economy.<br /><br />http://theburningplatform.com/economy/the-federal-reserve-must-die-1 The Fed must die before we can have a stable economy.

http://theburningplatform.com/economy/the-federal-reserve-must-die-1

]]> By: Carlosjii http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53560 Carlosjii Mon, 24 Aug 2009 14:03:13 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53560 "Prediction is very difficult, especially about the future." - Niels Bohr "Prediction is very difficult, especially about the future." – Niels Bohr

]]> By: DownSouth http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53554 DownSouth Mon, 24 Aug 2009 13:32:05 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53554 patrick neid,<br /><br />Your comment cuts to the heart of the great chasm that divides America.<br /><br />A Wall Streeter looks at the events of the past two years and believes Armageddon has been avoided.<br /><br />The rank and file American looks at the events of the past two years and believes they are living in Armageddon.<br /><br />As the <i>NY Times</i> reported this morning, 401(k) "account balances are roughly 25 percent lower than before the crash."<br /><br />http://www.nytimes.com/2009/08/24/opinion/24mon1.html?ref=opinion<br /><br />But something far more onerous has occurred, which the <i>NY Times</i> doesn't even mention. For those in or approaching retirement can no longer move their balances to safe investments that pay a decent return. My 93-year-old mother, who partially depends on interest from her savings to live, has seen her income from her balances drop by almost 75% over the past couple of years, even though those balances have remained the same.<br /><br />Twenty years ago Gordon Gekko drew a bold line between engaging in productive endeavors and playing zero sums games. Today's Wall Streeters don't even acknowledge the difference. patrick neid,

Your comment cuts to the heart of the great chasm that divides America.

A Wall Streeter looks at the events of the past two years and believes Armageddon has been avoided.

The rank and file American looks at the events of the past two years and believes they are living in Armageddon.

As the NY Times reported this morning, 401(k) "account balances are roughly 25 percent lower than before the crash."

http://www.nytimes.com/2009/08/24/opinion/24mon1.html?ref=opinion

But something far more onerous has occurred, which the NY Times doesn't even mention. For those in or approaching retirement can no longer move their balances to safe investments that pay a decent return. My 93-year-old mother, who partially depends on interest from her savings to live, has seen her income from her balances drop by almost 75% over the past couple of years, even though those balances have remained the same.

Twenty years ago Gordon Gekko drew a bold line between engaging in productive endeavors and playing zero sums games. Today's Wall Streeters don't even acknowledge the difference.

]]> By: patrick neid http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53547 patrick neid Mon, 24 Aug 2009 09:56:18 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53547 It's called the soothsayer scramble. <br /><br />Missing monster rallies against predicted Armageddons can be career threatening. In Chicago/New York it usually ends up in driving cabs! It's called the soothsayer scramble.

Missing monster rallies against predicted Armageddons can be career threatening. In Chicago/New York it usually ends up in driving cabs!

]]> By: francois-guillaume http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53545 francois-guillaume Mon, 24 Aug 2009 08:37:44 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53545 nobody talks about the I shaped scenario... that is a continuous and never (for the foreseeable future) ending drop to GDP... nobody talks about the I shaped scenario… that is a continuous and never (for the foreseeable future) ending drop to GDP…

]]> By: Hugh http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more.html#comment-53541 Hugh Mon, 24 Aug 2009 06:42:44 +0000 http://www.nakedcapitalism.com/2009/08/roubini-on-u-shaped-recovery-more-statesmanlike-or-less-certain/#comment-53541 Is there really much new in this piece by Roubini? Many of us have been making these points for some time. The fundamentals remain unaddressed. Consumers. are. not. coming. back. (Indeed you have another post up on this very subject.) It isn't just that the financial system is damaged. It needs to be reformed and restructured. This too is not in the cards. And of course since consumers aren't going to be spending economic activity in the rest of the world is going to be affected negatively. <br /><br />"the releveraging of the public sector through its build-up of large fiscal deficits risks crowding out a recovery in private sector spending"<br /><br />To be honest, I have never understood this. Where is this private sector spending going to come from? Companies? Consumers? Mice? I'm just not seeing it. The government remains the only real spender available, and so far it is doing a really lousy job of it. But I don't see any near term demand for credit it will be displacing. And as the government is backstopping everyone else what would keep it from backstopping private credit for a while if the private sector showed signs of spending more?<br /><br />I don't see oil going to $100 largely because it moves with the stock market. They are tandem bubbles. The stock market would tank well before $100 and take oil with it. Parenthetically, why are none of our leaders doing anything about the current speculative bulge in oil? Yeah, capture, I know. <br /><br />Rather than the silly letter models, as I have said before, we should be looking at 3 periods: now to the end of the year, 2010, and 2011 and beyond. I could be wrong but I don't see how the bubble in the stock market can be sustained through the winter. I would call this the Stock Market phase. 2010 is the Election Year. More of the original stimulus will be coming in. But if the stock market is down and the fundamentals are worse (and they will be), then Obama and the Congress will have a strong incentive not to change course but to increase spending (in short term not very effective ways) to help Democrats in the election. Republicans will oppose it for the same reason. 2011 for me looks like the Wall. I see the most likely outcome for it to be depression. Best case would be Japanification but I don’t think the fundamentals will allow us to tread water indefinitely, especially since that is what we are doing now. Is there really much new in this piece by Roubini? Many of us have been making these points for some time. The fundamentals remain unaddressed. Consumers. are. not. coming. back. (Indeed you have another post up on this very subject.) It isn't just that the financial system is damaged. It needs to be reformed and restructured. This too is not in the cards. And of course since consumers aren't going to be spending economic activity in the rest of the world is going to be affected negatively.

"the releveraging of the public sector through its build-up of large fiscal deficits risks crowding out a recovery in private sector spending"

To be honest, I have never understood this. Where is this private sector spending going to come from? Companies? Consumers? Mice? I'm just not seeing it. The government remains the only real spender available, and so far it is doing a really lousy job of it. But I don't see any near term demand for credit it will be displacing. And as the government is backstopping everyone else what would keep it from backstopping private credit for a while if the private sector showed signs of spending more?

I don't see oil going to $100 largely because it moves with the stock market. They are tandem bubbles. The stock market would tank well before $100 and take oil with it. Parenthetically, why are none of our leaders doing anything about the current speculative bulge in oil? Yeah, capture, I know.

Rather than the silly letter models, as I have said before, we should be looking at 3 periods: now to the end of the year, 2010, and 2011 and beyond. I could be wrong but I don't see how the bubble in the stock market can be sustained through the winter. I would call this the Stock Market phase. 2010 is the Election Year. More of the original stimulus will be coming in. But if the stock market is down and the fundamentals are worse (and they will be), then Obama and the Congress will have a strong incentive not to change course but to increase spending (in short term not very effective ways) to help Democrats in the election. Republicans will oppose it for the same reason. 2011 for me looks like the Wall. I see the most likely outcome for it to be depression. Best case would be Japanification but I don’t think the fundamentals will allow us to tread water indefinitely, especially since that is what we are doing now.

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