Professor Roubini's Summary of the US Economic Situation (October 2008)

Dear Friends,

New York University Professor Roubini's words of wisdom on Open Exchange, Bloomberg, is worth listening to. Although he is generally regarded as the man who views the glass as half empty, i.e. a pessimist, he has been absolutely right for the last 1.5 years.

Best wishes,

Ooi

Some issues discussed -

• Bottoming of US FOMC Interest Rate to near Zero,
  
• higher cost on US$ in the long term,
  
• L Shape Economic Stagnation Scenario would be very lucky,
• This is the worst severe recession in last 40 years, and
  
• markets are going to stop rising in their rallies.

"We've had so many bubbles that we are running out of bubbles to create". "Our (US) manufacturing base has been significantly impaired." (Roubini)



In the second segment, the following issues were discussed -

• Not worried about inflation - the least of the problem for Federal Reserve to worry about.
  
• Six months from now, we're going to be worried about deflation rather than inflation.
  
• This recession will be much deeper and protracted than the others.
  
• Housing prices have fallen 25% and will fall another 15% to a total of 40%. E
• stimate of US$1 trillion of total bank losses is now the floor not the ceiling of total bank losses. (Roubini)

This is the 2nd part of the Video Interview of Professor Roubini.