NYU's 'Dr. Doom' Roubini: Stocks may fall another 20% during recession

America panicked and sold everyhing cheap. Homes, and now, stocks together. All are way oversold and now it's time to reinvest in real estate and securities. Take your pick and don't be afraid - this still is the world's strongest democracy and we shall pull ourselves (and the rest of the world) out of this one too very soon.

Unless we stop all the corruption, it will stay par for the course...

I am almost 69 and have lived thru a lot of US history. Here are a few observations.

The current state of US financial markets is a 40 accumulation of screw ups in social, governmental and economic philosophies. They were generally well intended. Sadly, good intentions frequently lead to a very hot place. Of course good old greed helps grease the skids.

There are a lot of "cooks" who have created our current financial stew. I will probably offend all of you, but some of the noteable cooks include:

1. LBJ/Nixon. They removed any backing to our currency in the early 1970's so that government could spend without limits.

2. Proliferation of powerfull Special Interest groups. The civil rights movement in the mid 1960's gave birth to many of these groups. The rights movement started out to address the abusive social problems that the blacks had in specific parts of the country. Once the civil rights laws were in place they were used to create additional laws to advance other group's demands.
US culture, developed over 400 years, was torn apart in a few decades thru clever, and frequently arrogant, application of these laws. A simple example is the disappearance of the Christmas season. The country is still over 90% Christian but people are embarrassed to say "Merry Christmas". Christmas was a special season of public good will among all citizens... but it was created as a "Christmas" season...nothing else. We will miss it.
I am not a member of a church. Yes, I do believe in god.
3. The press is hardly "free". News is presented with a biased agenda. There is a scarcity of broad facts when discussing any conroversial issue. Facts are just a simple snap shot.
One glaring example, is US foreign police in the middle east. It cannot be discussed openly with a view to fairly understanding all sides. US policy is highly biased and "sold" to the public...try to say that in a public forum and you will be pillored.
Before I retired, my firm had offices high up in the WTC. After I watched the planes hit I sent Pres. Bush an email on 9/12 suggesting that:(a) we limit our military hits to the areas that we know the bad guys were in but NOT get pulled into a wide war in the Middle east. Alexander the Great hit a stone wall in Afgan and after 3 years married a tribal girl to get a political settlement; (b) the US should force an fair and perminant peace agreement on both Israel and the Palestinians. The agreement would be equally fair to both sides. I suggested about nine points for such an agreement. A fair settlement is not rocket science as the press would have you believe. This conflict was a cancer that was (and is) spreading and needs to be taken out.

4. Citizenship is being totally devalued. Nearly half the voters do not pay taxes.You are not a citizen if you are not making the pie bigger and/or better.

5.We no longer have national boundries...that's a fundamental defination for any country. The illegal problem is a Mexican issue but you must use works like "hispanic" or "illegal alien" when it's just a border problem with Mexico. We must be politically correct and not offend anyone.

6. We are now bilingual. The quickest way to tear any country apart is make it bilingual. My dad came out of a remote village in the Carpathian Mountains. It's north of Vlad's(the impaler) area. They spoke Hungarian and German. When I wanted to learn either language he said "we are Americans and we speak English". My dad was a dollar a year man at General Motors and was recognized by the government in 1946 for his engineering war efforts...he was one of 7 recognized at GM.

7. Our public school system is god awful. We score at the bottom of the 25 industralized countries. We spend more per capita than any of the other countries. We are failing because of a collapse of stable homes not a lack of funding.
I have a BS, MS in business and doctorate in applied math. Believe me, our schools don't know how to teach math. SOL's are making every state create the wheel. The kids are taught from lectures created by each teacher rather than from standard text books.
I have kids in the public schools in grades 6,10 and 12 so this is stuff I live with every day.

7. We are giving up leadership in primary areas of science. The Europeans are firing up the next generation of colider. This machine will open another window into the universe. We stoped construction in the early 1990's over a few billion.

We are talking about a revisit to the moon in ten years. That's a joke. Werner Von Braun was ready to take us to Mars in the later part of 1970's. He headed NASA and had put us on the moon without a failure. Congress would not fund it and Werner quit. Werner built NASA and the construction of the Saturn rocket.

We began to back away from the exciting frontiers of science 30 years ago. Even today we have not been aggressive on stem cell research. If you understand the research it has nothing to do with killing. We have politicised a basic area of science.
Yes, I do believe in god.

8. Many of our private sector leaders are greedy beyond belief. They export jobs, technology and R&D to make short term profits. They do not behave as Americans nor consider the effect of their actions on the American worker. I worked in steel mills until I was out of grad school. Presidents back then made around 40 times the factory worker pay and had the same pension plan. Today they make 400 times.
Some of this was the result of a pension law, ERISA, which removed most of the top guy's pay from pension benefits. That removal led to the demise of pensions and absurd levels of executive bonuses. I testified in Washington in 1977 and agrued against 401(k) plans as a replacement for defined benefit plans.
I was a CEO of a national consulting firm.

9. Unions have not figured out how to equate worker compensation relative to enhanced worker production within a competitive environment. Compensation was a political process. Bargining, with the "Strike Threat" worked for a few decades after WW II when the US controlled global manufacturing but ultimately led to job export for manufacturing.

You're all bored by now or mad at me so I'll close by saying that the financial mess is just reflecting the broader forces in our country.

How long to turn around? At least a generation... if we have the will. Think we do? Sadly, we seem to believe we will fix the problems by printing paper and passing laws (more paper).

Remember this, if nothing else: always wash your hands after you poop.

We saw Dow hit 14,198 because of greed now with all the big companies announcing lay-offs plus Maddoff scandal ..it could bring another panic sell off...the worst is yet to come....(i won't be surprised to see Dow with a short rally but bottoming out at 7,500 or even less..oh well "I wish someone has given me a crystal ball as a christmas gift")..IMHO although most of the blue chips have been beaten badly which make them look cheap (tempting) ..still there is no point of catching a falling knife in this risky economic environment.. I have to stay on the sideline and hope to see a turnaround late this year...Good luck to all.