[lbo-talk] Roubini: Worst Financial Crisis Since the Great Depression and W

[Cseniornyc at aol.com]

Among a large plethora of analysts, recently  Nouriel  Roubini,a sharp 
rightwingish economist, has  predicted that the US and  global economy is heading 
toward serious recession. Doug Henwood's answer to  this view was:
"Again, maybe so, but there's no evidence that this is  happening yet.
It will be very interesting if the oil bubble bursts, too.  "
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This is a very strange  comment by a keen observer like  Henwood because 
there is a strong consensus among analysts and forecasters that all the indicators 
of a serious recession are swirling  around us. The economy has lost jobs for 
four months in a row, which has never  happened without a recession. Consumer 
confidence has dropped to a 28 year low –  a level not seen since Jimmy 
Carter was president. Home foreclosure filings are  up 65 percent over last year. 
And now commercial real estate prices are heading  south, dropping 6.2 percent 
in the first quarter. 
Other "evidence": the Case-Shiller index shows that average  home prices are 
down 17% and still pushing down. Yesterday the Conference Board  announced all 
major economic indicators are down. Today the FED announced a  forthcoming 
period of prolonged slow growth. Hank Paulson repeated the same.The  GSEs are in 
deep trouble. Every week a major write off in the billions is  announced by a 
major bank. The Dow is down over 3,000 points for the year .Store  chain 
closings led by Starbucks are frequent .Malls are half empty.  Steve-Barry's a 276 
store chain led by Sara Jessica Parker, just  collapsed.
In April the economy lost 80,000 jobs. The June figure show a  lost of 62,000 
for the month and a total of 438,000 for the first half of 2008.  Car sales 
are at a 10 year low and even the WSJ announce a price hike to $2.The  dollar 
continues to head in afree fall.
So if all these points are not recessionary  evidence,then   know don't what 
it is.
The major observation,however, would be, that for the lat  decade, the major 
US engine of growth has been debt and not real investment and  capital 
formation. Now the debt machinery originating in housing and  securitization is 
stalled. So what is there to replace it?
As to regard oil as a bubble, the implication here is a denial  that Peak oil 
is here , supply is finite, that a major growth in global demand  has 
occurred and that the price push is all due to speculators. (The right's  view). 
Problem is that the whole commodity spectrum from aluminum to rice is  then in a 
"bubble".
Hope Mr Henwood is not advising oil traders like the SemGroup  who just 
acknowledged today losses of $3.2 bn after betting that oil crude  prices would 
decline.Two similar NY based funds from G/S and M/S also lost  billions last year 
in a similar  strategy.

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