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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerNot quite. Roubini's forecast has not changed since President Obama's election and inauguration, and his once-extreme forecasts have proved to be more accurate than estimates by most economists.
China to weigh on stocks
Roubini, the once obscure New York University economics professor who two years ago predicted the current global financial crisis and recession, now believes stock markets around the world will fall 20% from current levels, due to China's recession, Bloomberg News reported Friday.
Further, Roubini believes China is already in a recession despite its most recent GDP report, which showed 6.8% growth in Q4 2008 and a 9% growth rate for 2008.
"Demand is falling in China, they're over-invested in capacity and there's a global supply glut," Roubini told Bloomberg News. "It has very, very important implications."
Economist David H. Wang, a China expert, told BloggingStocks Friday China's economy has already slowed so much -- it's slowed from double-digit to single-digit growth -- that it's already in "an equivalent recession." Moreover, Wang is also concerned that China may have massaged its recent GDP data somewhat, to the upside.
"It would not be beyond the realm of possibility for China to overstate GDP growth, then come back and revise the data lower at a later date," Wang said. "And if in fact China's economy continues to slow, that would significantly decrease demand for raw materials and commodities, which would weigh on both international economies and stock markets."
Roubini's forecast for U.S. and global stocks differs with Wall Street's consensus, which sees a 29% increase in the S&P 500 from Thursday's 827.50 close, Bloomberg News reported.
Market / Economic Analysis: Again, here's hoping Roubini is wrong, and the Wall Street consensus is correct. So far, Roubini has been on the mark, with the latest bulls-eye being his securities loss prediction for banks and brokers. Further, from a technical standpoint, a Dow decline through key support in the 7,300-7,600 range would put Roubini's forecast in view -- and there's not much technical support below it.
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Reader Comments (Page 1 of 1)
1-23-2009 @ 12:48PM
BHarrison said...
The quandry is that both the USA and the world in general have "over produced" primarily for the benefit of increasing the wealth of the wealthy. Yes, it employed many middle class and lower class workers; but these jobs played out with the saturation of the overproduction. The straw that broke the back of the economies was the use of FRAUD to subsidize the financing of this over production . . . it totally undermined and wrecked the credit financing industry.
Now we are confronted by the government's abject failure to indict and prosecute the "criminals" who orchestrated and perpetuated all of these frauds . . . instead, they have left these white collar crimials in charge of many corporations while trying to implement economic recovery. This simply is NOT going to be successful. There can be no INTEGRITY in these corrupt corporations; and there will be little faithe and confidence in the financial reports of these corporations or in the stock market.
It appears that neither our government nor our business institutions can quite make the transition to an economy with REGULATIONS, oversight, and integrity. This IS the primary problem that we are confronted with.
1-23-2009 @ 1:36PM
jlytle777 said...
BH: It's so refreshing to read an intelligent comment anywhere on aol!
1-23-2009 @ 1:39PM
Athelstan said...
FDRoosevelt, whether you approve of his handling of the depression or not, did not permit party dogma and rigid philosophical stands to be his guiding principle in dealing with the national emergency. Let us hope Pres. Obama follows the same approach. The rigidity of dogma has no place in dealing with what is now the greatest crisis in the US since the depression of the 30s, and perhaps the Civil War as well. Pragmatism and the willingness to experiment with what actually works with a focus on the facts not nostrums and economic philosophy are what is needed.Obama MUST GET THE MONEY INTO THE HANDS OF THE GREATEST NUMBER OF PEOPLE AND VERY QUICKLY, OR HE MISSES THE GOLDEN OPPORTUNITY TO NIP THIS DEPRESSION IN THE BUD. WORLD CONFIDENCE IN HIM AND THE DEMOCRATS WILL PLUMMET MAKING THE DEPRESSION THAT MUCH WORSE.
1-23-2009 @ 3:30PM
Robert Bennett said...
Thank you, Doctor Doom, for your stirring upbeat and encouraging remarks.
1-23-2009 @ 3:41PM
jim said...
Yes, sure print more money like FDR, what foresight, at all co$t,try to delay the inevitable, push the responsibility on our children, what we weren't willing to be accountable for. GREED. Just change the D in Greed to an N and print more of it.... we are going GREEN alright but this won"t save our Nation let alone our world......
Time to look up at what is about to befall us, Public trust given to vain imaginations, The shame of it all is, we have done this to ourselves.
As one great sojourner said, "We will get what we want, but we won't be able to eat what we get"
Lets begin by shoving another $20.00 dollar bill down our throat, let us see what we will get for our return....
As a dog returns to its VOMIT, so a man returns to his SIN........
God help us I think we're feeling sick!!!
1-23-2009 @ 9:56PM
orish1 said...
b.harrison....bravo, for explaining the crisis in terms many may understand.....well said, 2009 will be dismal at best, if a recovery is iminent it will be in maybe a couple of years....we must change our life style, rethink consumerism for consuming's sake....we must be vigilent and intelligent .....as for me i have little faith, zero confidence, and am committed to not buying anything i don't need to survive.....i'm waiting to see the mighty fall. but i think the wealthy already helped the wealthy to cushion the fall...men like madoff should be executed in full public view.....blag should have his tongue ripped out, every lying cheating sob from the bush admin should be brought up on charges of treason and murder....