Roubini Says `Panic' May Force Market Shutdown

[swag]

Source: Bloomberg

Oct. 23 (Bloomberg) -- Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

``We've reached a situation of sheer panic,'' Roubini, who predicted the financial crisis in 2006, told a conference of hedge-fund managers in London today. ``There will be massive dumping of assets'' and ``hundreds of hedge funds are going to go bust,'' he said.

Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut interest rates on Oct. 8. Emmanuel Roman, co-chief executive officer at GLG Partners Inc., said today that as many as 30 percent of hedge funds will close.

``Systemic risk has become bigger and bigger,'' Roubini said at the Hedge 2008 conference. ``We're seeing the beginning of a run on a big chunk of the hedge funds,'' and ``don't be surprised if policy makers need to close down markets for a week or two in coming days,'' he said.

Roubini predicted in July 2006 that the U.S. would enter an economic recession. In February this year, he forecast a ``catastrophic'' financial meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a ``sharp drop'' in equities.


Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=aTHELG0dV_e8&refer=news

[GreenPartyVoter]

1. Panic and catastrophic are two words I didn't want to hear in connection to

this mess.

I am sure the markets will all rally a bit when Obama is elected, but it will still take time for him to get his plans enacted.

God dave us from 3 more months of **.

[Dr.Phool]

2. This clusterfuck is beyond immediate repair.

And Roubini has been dead-on in his analysis for the last couple of years.

I'm not usually a worry wort, but I do have several months of dry goods and canned good stockpiled.

[Warpy]

17. That's probably a good idea

I toyed with the idea of getting out and stashing the boodle in T-bills last year, but the near insolvency of the government stopped me. This is such a drastic situation that no matter where I'd stashed it, there was likely to be at least part of it that would remain irretrievable, thus making the attempt a futile one.

While I don't see the abolition of the stock market in our future, I decided to stay put. My income hasn't decreased this year. It will probably decrease next year.

More problematic is the fact that banks might be shut as people panic and there are runs. Yes, we will probably see runs on our local bank branches.

A stash of cash in a very difficult to access spot would be a good idea, as would a stock of beans, grains and canned food.

[natrat]

19. going faster, can't shut her down, she's breakin up

[NoThirdBushTerm]

3. well

The deregulation policies have come home to roost. Reminds me of that WKRP episode where Mr. Carlson says "As god as my witness, I thought turkeys could fly."

[Supersedeas]

4. and the superwealth don't really give a fuck -- remember what George Carlin said

[Supersedeas]

5. and the superwealth don't really give a fuck -- remember what George Carlin said

[RainDog]

6. when will someone say the U.S. is bankrupt?

I mean, honestly, with Bush's trillions in deficit spending combined with TAX CUTS to those who didn't need them in the first place, combined with the Dept. of Homeland Security, which is the umbrella for all the military pork-crony crook spending that goes to Blackwater, Halliburton and other Bush organizations looting the treasury...

combined with ideologues that are incapable of handling this crisis, as they have shown for years and years by their blind adherence to failed economic theory...

how are we supposed to print more money to pay for a bailout for the rich w/o creating hyperinflation, which will only make things worse? -- for those already hurting, of course.

I understand the psychological need for a "bail out" strategy. But honestly, nothing is going to get better until all the bad debt, crappy ponzi scheme mbs and credit swaps are allowed to fail. We cannot have an economy that works while we have these fake investment instruments on the books of various banks, etc.

This is the crisis that Obama will have to face immediately - yet both republicans and democrats don't want to let mess run its course. I wonder what the entire world economy will look like in a post-Bush league era.

[bertman]

20. RainDog, interestingly enough Paul Krugman, the Nobel Prize winner for economics this year, says

that the U.S. economy is still strong and despite the current "crisis" should rebound just fine. He explained how our economy is so huge and so productive that the problems we are facing now and the bailout dollars are very small in relationship to the whole. I don't understand the details but he supposedly knows what he's talking about.

To hear what Krugman had to say on Fresh Air with TerrI Gross just go here: http://www.npr.org/templates/story/story.php?storyId=95...

One comment he made in response to Terri's inquiry of when will we be coming out of the current recession was something to the effect of it's going to get a lot worse before it gets better.

Not what we want to hear of course, but he does explain why and has lots of other interesting comments about HOW WE GOT INTO THE MESS.

[The Backlash Cometh]

7. Remember the days we use to make Christmas ornaments & gifts with popsicle sticks?

I think this might be a good time to start a retro Christmas trend.

[femrap]

15. I think you'd have to be over

50 years old to remember that. I wonder if the younger generations are capable of sacrifice and doing without. I've always clipped coupons and lived within a budget which included saving for a rainy day...but I don't see too many others doing this.

Many live from paycheck to paycheck and just paying the minimums on the credit cards. It will truly be a day of reckoning for many who bought into this 'Consumption brings Happiness' bullshit lie.

Homemade gifts are the best! I made chocolate truffles one year...fresh basil pesto sauce another. I framed some gorgeous greeting cards and photographs another year. This year, I'd like to give my repugnant family members a piece of coal. I guess I'll just paint a stone black. lol.

[The Backlash Cometh]

23. I just hope they don't bring back the pom-pom crafts.

[femrap]

29. I remember making these

hot pads on a little frame that I'd weave these stretchy little bands thru...I still have one. They really, really last!!!

pom-pom crafts...you mean like what cheerleaders use? I never made those. But I remember lots of popsicle sticks and clay bowls.

[Coventina]

26. It's going to be an Imagination Christmas this year!

Yayyyyyyy!!!!!

[CanonRay]

8. Roubini scares the crap out of me...

but he's ALWAYS right.:hurts:

[RedEarth]

9. I don't like to hear this

Roubini is one of the few people that predicted this mess. I sure hope he's wrong this time, but I'm almost betting he's not.

[RedEarth]

10. Thousands of hedge funds to close, says GLG chief Emmanuel Roman

Last Updated: 4:40PM BST 23 Oct 2008

Emmanuel Roman, of GLG Partners, said 25pc-30pc of the world's 8,000 hedge funds would disappear "in a Darwinian process", either going bust or deciding meagre profits are not worth their efforts.

"This will go down in the history books as one of the greatest fiascos of banking in 100 years," said Mr Roman, who co-runs London and New York-based GLG, a former division of Lehman Brothers Holdings with assets of $24bn (£14.8bn). "There need to be some scapegoats, and the regulators are going to go hunt people. That will be good in the long run."

His views were echoed by Professor Nouriel Roubini, a former US Treasury and presidential adviser known for his accurate prediction of financial crises, who estimated that up to 500 hedge funds would fail within months.

Both men were speaking at the same hedge fund conference in London on Thursday, and Prof Roubini said he would not be surprised if the US and other countries soon had to close their stock markets for more than a week to halt descent into "sheer panic".

The economist warned that the world is heading for a protracted recession that will end the US's financial dominance.

"It's the beginning of the decline of the US financial empire. The Great Depression ended in a massive war. I hope that's not going to happen but it's pretty ugly now," Prof Roubini said.

He added that turmoil over world trade, currency markets and debt is likely to cause geopolitical tensions between the Western world and emerging superpowers such as Russia, China and "a bunch of unstable oil states".

The conference saw analysts, economists and hedge fund managers discussing the possibility that global recession could now last two years on fears that government bail-outs and nationalisations have failed to stop the markets slumping.

"We're now paying the price for the biggest asset and credit bubble in history," Prof Roubini said, advising investors to stay clear of risky assets and keep their money in cash. "The bail-outs have not worked because the markets are no longer rallying, and the policy-makers have run out of options."

http://www.telegraph.co.uk/finance/3247878/Thousands-of-hedge-funds-to-close-says-GLG-chief.html

[RedEarth]

11. Roubini on CNBC ... video

http://calculatedrisk.blogspot.com/2008/10/roubini-on-cnbc.html

[progressivebydesign]

12. Irresponsible comments... that's what causes panic. n/t

[Pale Blue Dot]

22. Honesty is bad! Lies are good!

Nobody panic!

[HillbillyBob]

13. Greenspan is testifying in congress today

" i thought the banks would regulate themselves'' " i was wrong''
DUH Mr Greenspan you were so very wrong!
My partner and I have been looking for this mess for several years.
That was why we bought a small piece of farmland a year and a half ago.
We planted a fair size summer garden and also have a winter garden.
We put up about beans we grew and dried plus a bunch of stuff
in jars and frozen, plus we have several bags of dried beans from the store.
We also bought rice when on sale. So we have about 20 pounds of rice on
hand not as much as we would need. We live out in the woods where we can hunt too.
We were not looking forward to a depression , we just expected that things
could not go on forever the debt that we as individuals and as a country are in
was a disaster just waiting to happen.
The repug affliction of seeing what they want not what is has gotten us here
deregulation, killing pay raises, killing unions, employer pensions and insurance
on and on. I may not be all that smart, but even I could see ronnyraygun was an idiot
tool.
I had been living the depression for most of my adult life.
We are lucky and have managed to get slightly better off than before.
My partner has a decent job and I am disabled, fortunately his job is recession /depression
resistant and our land is big enough to feed us..now if we can learn to tan leather there are deer out there it can clothe us too if need be!

[femrap]

18. You're doing what I want to do....

get some land and get off the grid. Drill my own well, geothermal, and some solar panels. Grow some vegies...I'd like sheep so to have wool...and goats for cheese.

Grapes for wine would be nice too...and hemp for clothes and relaxation! lol.

I'm really tired of being around lots of people...willfully ignorant ones, at least.

Good luck to you!

[femrap]

14. K and R...

people need to know about this. The worse is yet to come.

And now that 'white powder' is being sent to the banks, there will be a reason to shut down the banks. I wonder if the bank who doesn't do as Daddy Warbucks (paulsen) says will get the 'real white stuff.'

Everyone should have some cash on hand to get thru a week or so. I just think it's smart to be prepared. And Roubini is no dummie. And if you need things that are only made in China, better get them now.

Just think about how little we make in this country...very scary. Good thing I like beans and rice!

[melody]

16. The doom and gloomers fail to point out

While Roubini is quite possibly right (he is often right), he isn't *always* right. Beyond that, a lot of people posting to this thread are talking about "rice and beans" and "stockpiling". Roubini said (direct quote):

>the world's biggest economy will suffer its worst recession in 40 years.

Forty years, guys. I'm 48. My parents survived -- we weren't well-off and we weren't homeless and we didn't go hungry. Why on earth draw up these horrible scenarios to scare people? We've had bad crap like this happen a couple of times in my lifetime. The difference is, we didn't know about it. We do now because of the internet. With more information, you get more anxiety if you don't put things in perspective.

[specimenfred1984]

21. I hereby redeem them in advance for "Enron 401k-ing" the entire U.S.

All of your money will be stolen from you for your own protection! But hey, I'm a big enough person to just forgive all the criminals as soon as they say they support someone I support!

[Strelnikov_]

24. If the market is shut down, what is the value of 'assets' traded on said 'market'? n/t

[lelgt60]

25. Please...individual survivalism is not the Democratic way...

Banding together is.

If you think owning or even using a piece of land to grow food is reliable in chaotic times, I suggest you take a look at history.

How are you going to protect your food supply from the hungry?

Even if you could, what about the old and sick. What if you or your loved ones get sick?

[wvbygod]

27. tribal

The size of the tribe is determined by the food supply. The tribes will not be based on
party choice. I suggest folks tone down the hatred of another human because of their
voting habits and work on getting along with a diversity of political reality.

[melody]

28. Well, let's all give up and shoot ourselves

Who would want to live in such a world?

[GetTheRightVote]

30. We may be down but we will survive, to live to get those who brought us to this point

We must not forget the greed that did this to us.

:grr: