Warning: More Doom Ahead (Nouriel Roubini)

[swag]

http://www.foreignpolicy.com/story/cms.php?story_id=4591

Last year’s worst-case scenarios came true. The global financial pandemic that I and others had warned about is now upon us. But we are still only in the early stages of this crisis. My predictions for the coming year, unfortunately, are even more dire: The bubbles, and there were many, have only begun to burst.

The prevailing conventional wisdom holds that prices of many risky financial assets have fallen so much that we are at the bottom. Although it’s true that these assets have fallen sharply from their peaks of late 2007, they will likely fall further still. In the next few months, the macroeconomic news in the United States and around the world will be much worse than most expect. Corporate earnings reports will shock any equity analysts who are still deluding themselves that the economic contraction will be mild and short.

Severe vulnerabilities remain in financial markets: a credit crunch that will get worse before it gets any better; deleveraging that continues as hedge funds and other leveraged players are forced to sell assets into illiquid and distressed markets, thus leading to cascading falls in asset prices, margin calls, and further deleveraging; other financial institutions going bust; a few emerging-market economies entering a full-blown financial crisis, and some at risk of defaulting on their sovereign debt.

Certainly, the United States will experience its worst recession in decades. The formerly mainstream notion that the U.S. contraction would be short and shallow—a V-shaped recession with a quick recovery like the ones in 1990–91 and 2001—is out the window. Instead, the U.S. contraction will be U-shaped: long, deep, and lasting about 24 months. It could end up being even longer, an L-shaped, multiyear stagnation, like the one Japan suffered in the 1990s.

[Taverner]

1. It all really depends on how Keynesian we go

If we go with a Keynesian Solution - I give it 3 years max

If we go with a Milton Friedman Solution - say hello third world USA

[Idealism]

3. Friedmanism has been so discredited

I don't think there will be much of a chorus to slash social programs and massively cut taxes for a few decades, at least, out of any crowd except FOX and friends.

[Taverner]

5. While it has been discredited, there are a number of Republicans who still wave its banner

And some of them still hold office

[Idealism]

6. Thank god we have a strong majority

And the recent crisis gives even one not adept at arguments an indefensible hole in free market logic.

[Taverner]

7. I might also note the DLC Dems were Friedman-o-philes too

At least a good many of them

I hope to whatever that Hillary has dumped her Friedman tendencies - but she is far away from Econ Policy. That may have been why she became SoS and not VP.

[lostnotforgotten]

2. And Just Think - Two Men - Bush And Cheney Are To Blame For It All

eom

[Dora]

4. No. An army of idiots are to blame for this. Not just those two. nt

[mikehiggins]

8. you are too generous by far

The list of characters responsible for what is happening begins with the SCUSA judges who put Bozo in office, all present or past Bush-apparachniks (including Rove, Rummy, Bolton, Gonzalez and that entire cast of characters), the Wall Street types who ignored centuries of hard earned lessons and went right back into the bottom-line me first stuff that led to the melt down, the GOPuke Party in its entirely, AIPAC, PNAC, most of the Democratic Party leadership, and most obviously of all the millions of assholes who reelected Bozo when we finally had a chance to get rid of him in 2004.

Disasters of this magnitude don't occur simply because Bozo and Darth headed the top of the ticket. It is a societal malaise, not just a simple affliction applying only to one small group.

Perhaps what we need is a kind of National Reconciliation Board like South Africa had, to try and explain exactly what happened and offer absolution to those who admit to their crimes and are willing to do whatever can be done to make amends.

Of course, Bozo and Darth will never admit they did anything wrong so we can, inevitably and if the administration has the will and backbone, bring them before the courts but there are all sorts of others involved, individuals and organizations, which fact should never be forgotten.

[lostnotforgotten]

9. Well If Justice Is Ever Served And We Reinvent The Guillotine ...

eom