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

[Cseniornyc at aol.com]

Doug Henwood says:"The leading indicators are negative, but mildly so. Even  
Roubini doesn't expect armageddon - I personally heard him say this to the  
Council on Foreign Relations. Like I say, it could get worse, but given all the  
blows the U.S. economy has taken, you'd think that GDP was running at -2%, 
and  not around 0%.  "
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Well  ,I listed about 15 different economic facts and indexes and Mr Henwood 
reduces  them to one set: the "leading economic indicators". Very clever.
I simply was  pointing out that evidence and facts are mounting up almost 
daily pointing out  to a recessionary trend. By the way,I didn't mention the word 
"Armageddon" or  Apocalypse or black hole depression, etc.This link between 
recession and  Terminator day is gratuitous and unfair.
Actually, disaster might be  preferable  because big crises usually lead to 
quick reactions and rapid  drastic solutions.It is very likely that because the 
economy has grown to  enormous proportions in all sectors and it is now 
globalized , a 1929 type of  big depression ha low probability. But the 
alternative: a slow-mo ,creeping,  stop-go recessionary economy might be even worse if 
prolonged, as in a L type of  outcome. The agony of steady unemployment, real 
wage losses and upward price  pressure might push the working classes toward 
populist right wing  solutions
In any event my point is independent of Roubini's view. One  shouldn't rely 
too much of percentages or ratios but on the flow of evidentiary  facts. for 
instance: last week Ford Motor announced $ 9 Bn in losses. Wall St  says that 
bonuses for 2008 will be $ 28 bn lower than for 2007. It was revealed  today 
that the Federal deficit for $ 2009 will be half a Tn and higher if you  include 
the cost of the war. Sales of US homes are at a 10 year low. The IMF  sees no 
end to the financial crisis. Merrill Lynch reveals a further $ 6 bn  write off 
for this week. The dollar continue its free fall,etc
Still the  major crucial point is that for the last decade debt and 
financialization of  just every thing was the engine propelling the system and it won't 
be there  anymore .So any one who believes the economy will keep going should 
be clear as  to what the new engine will be about. Consumption as the chief 
component of the  GDP won't there because the mortgage refi binge  for home 
owners is  fimito
Interestingly ,economists Paul Krugman and Ken Rogoff coincided last  week in 
writing that " the question is whether we are in for a bad couple of  years 
or for a bad decade". Maybe we should write them that they are wrong  because 
the fall in the leading indexes is just mild.
By the way, Rockefeller's CFR is the perfect setting for that Italian right  
winger,Nouriel.

Cris Senior

 

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