Discussion of Housing Bubble, US Dollar, Debt, Trade Deficit, Oil, Gold, Consumer Spending, Central Banks, Inflation, Outsourcing and the Bleak Future of the US economy
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Friday, April 18, 2008
Professor Nouriel Roubini on US Recession
Nouriel Roubini making another round of predictions. Maybe he will have a wider audience this time around now that he has been proven correct on previous predictions.
Part 1
Part 2
Part 3
2 comments:
Anonymous
said...
Roubini is smart but I take exception to his socialistic view that the Govt should nationalize the mortgages. If it does that we will see hyperinflation such as has never been seen in the world before this time. Sure borrowers will be off the hook but the dollar will be meaningless in the rest of the world. Deficits would soar overnight as the rest of the world stops lending. To counteract this interest rates would have to rise(double/triple) and that would completely offset any good that the buyout does because no one would be able to get mortgages at those interest rates. So the debtors would be rescued from high payments but still be as locked into their houses as before because no one would want a mortgage at 15%-20%/yr.
These debtors would be better off walking away, especially since the Congressional morons eliminated the tax liability to homeowners of doing that. When that happens, Main street would rent, and be saved, and Wall Street would receive the very painful enema it deserves.
What should happen is that the banks should be allowed to fail.
You make some very good points and I agree. Nationalizing mortgages would ruin our currency and cause hyperinflation to spiral out of control.
Regarding your comment: "Deficits would soar overnight as the rest of the world stops lending." (My Thoughts: the US Gvt and fed would try to pick up the slack--causing more harm to the dollar)
"To counteract this interest rates would have to rise(double/triple) and that would completely offset any good that the buyout does because no one would be able to get mortgages at those interest rates." (My thoughts: Impossible in this day/age to double or triple rates, as this action would cause numerous derivative implosions and the domino effect of counter-party failures would bring the world's financial system to an abrupt halt/collapse.
I agree that we should let the banks fail, but the underlying issue (what the fed is trying to prevent) is what I just mentioned above -- The HUNDREDS OF TRILLIONS in Derivatives & Credit Default Swaps (CDS)... They will be propped up to the end by the Fed... Failure of large banking institutions would unravel this market and bring on a Financial Apocalypse -- the likes of which have never been seen...
but then again, maybe that is what is really needed -- destroy the system to clean out all the fraud, and financially ruin the greedy scumbags -- and then start over again from scratch by creating a new system based on a integrity/ethics and strong currency that holds value over time(would probably take a decade or better to work out and the world would live through a dark depression)
Right -- I know... keep dreaming. Hyperinflation is the route that was chosen and (if successful) our only way out -- The only other alternative is Default and the Apocalypse mentioned above.
2 comments:
Roubini is smart but I take exception to his socialistic view that the Govt should nationalize the mortgages. If it does that we will see hyperinflation such as has never been seen in the world before this time. Sure borrowers will be off the hook but the dollar will be meaningless in the rest of the world. Deficits would soar overnight as the rest of the world stops lending. To counteract this interest rates would have to rise(double/triple) and that would completely offset any good that the buyout does because no one would be able to get mortgages at those interest rates. So the debtors would be rescued from high payments but still be as locked into their houses as before because no one would want a mortgage at 15%-20%/yr.
These debtors would be better off walking away, especially since the Congressional morons eliminated the tax liability to homeowners of doing that. When that happens, Main street would rent, and be saved, and Wall Street would receive the very painful enema it deserves.
What should happen is that the banks should be allowed to fail.
Anon,
You make some very good points and I agree. Nationalizing mortgages would ruin our currency and cause hyperinflation to spiral out of control.
Regarding your comment: "Deficits would soar overnight as the rest of the world stops lending." (My Thoughts: the US Gvt and fed would try to pick up the slack--causing more harm to the dollar)
"To counteract this interest rates would have to rise(double/triple) and that would completely offset any good that the buyout does because no one would be able to get mortgages at those interest rates." (My thoughts: Impossible in this day/age to double or triple rates, as this action would cause numerous derivative implosions and the domino effect of counter-party failures would bring the world's financial system to an abrupt halt/collapse.
I agree that we should let the banks fail, but the underlying issue (what the fed is trying to prevent) is what I just mentioned above -- The HUNDREDS OF TRILLIONS in Derivatives & Credit Default Swaps (CDS)... They will be propped up to the end by the Fed... Failure of large banking institutions would unravel this market and bring on a Financial Apocalypse -- the likes of which have never been seen...
but then again, maybe that is what is really needed -- destroy the system to clean out all the fraud, and financially ruin the greedy scumbags -- and then start over again from scratch by creating a new system based on a integrity/ethics and strong currency that holds value over time(would probably take a decade or better to work out and the world would live through a dark depression)
Right -- I know... keep dreaming. Hyperinflation is the route that was chosen and (if successful) our only way out -- The only other alternative is Default and the Apocalypse mentioned above.
Thanks for posting up
Randy
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