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That is just the last few weeks....but a good deal above 600.
Posted on 11/04/2009 11:22:26 AM PST by Ernest_at_the_Beach
NEW YORK (MarketWatch) -- The U.S. and the global economy will experience massive deflationary forces through 2012, said Nouriel Roubini, economist at New York University, Wednesday. At a conference, Roubini said that although easy monetary policies have fueled another asset bubble, the deflationary forces coming from industrial overcapacity, falling labor costs and a still damaged financial system will prevail over the next two years.
(Excerpt) Read more at marketwatch.com ...
Roubini warns "party" in risk assets may end badly
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By Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Markets, be they stocks, emerging markets or commodities, have rallied too far, too fast because the global economy will experience an anemic recovery rather than the hoped-for V-shaped recovery, New York University economist Nouriel Roubini said on Wednesday.
Roubini, who became famous for predicting the unraveling of the housing market and the credit crisis, said that the current "party" can continue for another six months.
But it will eventually end badly, he warned, as much of the rise in asset prices since March is yet another bubble created by a huge pool of global liquidity.
bookmark.
Deflation + inflation = price stability.
Seriously, it seems a little simplistic, but think about:
The government can cause inflation with no difficulty (since it doesn’t seem to give a crap about debt): spend more money, and print whatever you can’t borrow. So, it can counter whatever deflationary pressures there are by printing more money. The people who get screwed are those in debt (i.e., homeowners), because the gap between their interest rate and the rate of inflation will remain huge.
This isn’t conjecture: It’s already happening. Relative to the price of commodities, the price of manufactured goods has plummeted. That’s deflation. (Not exactly, but it’s closer to deflation than the disinflation most people think of when they hear deflation.) That means that interest rates on federal bonds, which should be soaring due to increasing debt, are actually going down instead. So instead of losing property, we’re just becoming more and more in debt to foreigners who are buying this debt.
I can’t wait for food, insurance, medicine, utilities, and my other living expenses to go down................/s
Doesn’t deflation + inflation= stagnation?
Nice thread-—thanks for the key to it.
Interesting post and some very interesting comments being written.
Stock-Markets / Mainstream Media
Nov 03, 2009 - 07:22 PM
By: Nadeem_Walayat
Nouriel Roubini, Dr Doom the academic economist who has repeatedly peddled the stocks bear market case to a captured audience of naive investors has again come out with another in a series of Doom stories to scare investors away from the market.
Contrary to the media hype surrounding Nouriel Roubini's market calls, his actual track record is truly appalling, which is suggestive of someone who does not actually trade his calls, therefore there is no real monetary incentive to face reality and change, instead what follows is a media machine feeding the mainstream press and publicity machine to perpetuate a myth of accuracy.
Nouriel Roubini's Stock Market Calls 2009 -
Back at the stock market bottom in early March 2009, Nouriel forecast that the S&P would fall from 676 to below 600 during 2009- Bloomberg :
“My main scenario is that it’s highly likely it goes to 600 or below,” Roubini said today in an interview at the Chicago Board Options Exchange Risk Management Conference in Dana Point, California. A level of “500 is less likely, but there is some possibility you get there.”
Then again a couple of weeks into the stealth bull market rally, Roubini emerges to state - Bloomberg - Roubini Says Stocks Will Drop as Banks Go ‘Belly
[snip]
Yeah.
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That is just the last few weeks....but a good deal above 600.
“The government can cause inflation with no difficulty (since it doesn’t seem to give a crap about debt): spend more money, and print whatever you can’t borrow. So, it can counter whatever deflationary pressures there are by printing more money. “
Didn’t work for Japan. While what you have described normally works it may not be the case when the banking system is sufficiently damaged.
Well, yeah. I wasn’t recommending printing money as an economic solution! Banks have to charge a significant interest rate to make an investment worth risking their own assets in a weak economy, but any firm that would pay say 5% interest in a 0% inflation environment can’t possibly afford the appreciation on their loan.
My point wasn’t that it was reasonably economic practice, just that deflation and inflation can cancel themselves out, so what you really create is debt.
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