muses of the moment

June 9, 2009

“recovery” will be bust says Nouriel

Nouriel Roubini looks at what most people call “green shoots” and sees “yellow weeds.”┬áHe lays out 9 reasons why the recovery will go bust. I think we should pay heed to the Doctor. He was talking about banking implosion in 2006-7 and EVERYONE said he was crazy. He was talking recession and the TV Talking Heads had him on only to laugh at him.


but Nouriel is not one to say “I told you so”, although he could.

Link to full article.

The most important of his 9 reasons:

Second,this is a crisis of solvency, not just liquidity, but true deleveraging has not really started, because private losses and debts of households, financial institutions, and even corporations are not being reduced, but rather socialized and put on government balance sheets. Lack of deleveraging will limit the ability of banks to lend, households to spend, and firms to invest.

Investors do not get it. The same over-leveraged, debt-implosive banking crisis from 2007-2008 is still NOT FIXED. It simply got moved off the balance sheet.

Protect your capital, the government will not bail you out.

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