Savings Experiment: Snow Removal
The Money Man Behind Rick Santorum: Who Is Foster S. Friess?Nouriel Roubini, the once obscure New York University economics professor who two years ago predicted the current global financial crisis, now says the world's largest economy will need a large fiscal stimulus from the federal government to avoid a serious economic downturn.
Further, failure by Congress to pass a large fiscal stimulus, as well as undertake other measures, will lead to a 18 to 24 month recession, which will push unemployment above 9%, Roubini said on his website, the RGE Monitor.
Sees need for large fiscal stimulus
"Much more needs to be done including further monetary policy easing, a large fiscal stimulus program to boost demand at the time when private aggregate demand (consumption and investment) are sharply falling; and a plan to reduce the mortgage debt burden of millions of distressed households," Roubini said.
Further, Roubini said the U.S. government will have to double its purchase of bank stakes and require these banks to eliminate dividends to save them from bankruptcy. He also now sees bank/financial institution credit losses stemming from the collapse of the subprime mortgage market of about $3 trillion, up from his earlier estimate of $1-2 trillion.
The above statistics paint a sobering prospect/picture of economic contraction, but Roubini does see a ray of light:
"But at least policy is going in the right direction and the probability of a systemic meltdown -- that reached a peak a week ago -- is now significantly lower," Roubini said.
Indeed, monetary officials from the United States and the European Union are now flooding the global money supply with dollars to counteract dollar hoarding by banks. Meanwhile, fiscal governments from the major economies in these regions will spend about $3 trillion to recapitalize banks and buy/remove toxic assets from the global financial system.
Monetary and fiscal officials hope that the above actions, combined with guarantees for commercial paper, will maintain financial system liquidity -- the money flows required to keep commerce functioning.
Monetary Policy/Economic Analysis: Economist Roubini, along with Yale University Economist Robert Shiller, have accurately predicted the financial crisis, with Shiller's work concentrating on the bursting of the housing bubble. Moreover, it's generally agreed that additional fiscal stimulus will be needed, with debate now centering on the package's size and structure.
One item the fiscal package must include: more funds/authority to refinance at-risk mortgages to end the prevalence of home foreclosures that continues to erode the asset base of the U.S. financial system: its those foreclosures, and the subsequent downgrade of mortgage backed securities linked to them, that triggered the start of the financial crisis.
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Reader Comments (Page 1 of 1)
10-19-2008 @ 10:02AM
dr said...
we are cereating an ongoing stimulus package
prior to the financial crisis a gallon of gas was approx $1.00 higher than it is now. that represents approx 420,000,000 of income staying with the consumers per day at a minimum. no matter what opec does during tough economis times prices will not rise much. this of course does not take into account other petroleum products that will be cheaper to consume
that will increase the oil stimuls package to ver 300-400 billion per year ( at a minimum )without more borrowing and directly into consumers pockets
10-19-2008 @ 4:21PM
Joe Bob said...
more like Dr. Accurate
11-28-2008 @ 4:22AM
Dr. Hyperinflation said...
Dr. Doom & Robert Shitter never recommends good americans should accept we are shit and should accept the downturn rather by consolidation the foundation for hyperinflation. Clearly we all know which is easier to be recovered.