New York University’s Nouriel Roubini (Istanbul, 1958) aka Dr. Doom, said yesterday that the markets have become destructive forces and it could make sense to close them for a period of time to stop the free-fall. He also said yesterday in Madrid that he “prefers the costs of over-regulation than the risks of the current regulatory system” (the one that just collapsed in front of our eyes).
I like the prognoses of Roubini, even though nobody ever used to take them seriously before. And this one is for revision (meaning, let’s get back to this in 12 months time): he said yesterday that things now are just getting worse, not better, and that the recession will last more than 2 years and will also affect emerging market economies worldwide. (ie. China growing less than 7% means increased poverty).
We will see, but looks like Dr. Doom could be more on target than we’d like. I mean, read this excerpt from October 24th 2008: “In July 2006, Roubini predicted the financial crisis. In February this year he forecast a “catastrophic” meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a “sharp drop” in equities.
In any case, he does not think it will be as bad as the Great Depression, where output in the US fell more than 20%.
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