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Recession will be nasty and deep, economist says
Market Watch ^ | August 23, 2006 | Rex Nutting

Posted on 08/25/2006 12:45:28 PM PDT by Toddsterpatriot

WASHINGTON (MarketWatch) -- The United States is headed for a recession that will be "much nastier, deeper and more protracted" than the 2001 recession, says Nouriel Roubini, president of Roubini Global Economics.

Writing on his blog Wednesday, Roubini repeated his call that the U.S. would be in recession in 2007, arguing that the collapse of housing would bring down the rest of the economy.

Roubini wrote after the National Association of Realtors reported Wednesday that sales of existing homes fell 4.1% in July, while inventories soared to a 13-year high and prices flattened out on a year-over-year basis.

'This is the biggest housing slump in the last four or five decades: every housing indicator is in free fall, including now housing prices.'

The decline in investment in the housing sector will exceed the drop in investment when the Nasdaq collapsed in 2000 and 2001, he said.

And the impact of the bursting of the bubble will affect every household in America, not just the few people who owned significant shares in technology companies during the dot-com boom, he said. Prices are falling even in the Midwest, which never experienced a bubble, "a scary signal" of how much pain the drop in household wealth could cause.

Roubini is a professor of economics at New York University and was a senior economist in the White House and the Treasury Department in the late 1990s. His firm focuses largely on global macroeconomics.

While many economists share Roubini's concerns about imbalances in the global economy and in the U.S. housing sector, he stands nearly alone in predicting a recession next year.

Fed watcher Tim Duy called Roubini the "the current archetypical Eeyore," responding to a comment Dallas Fed President Richard Fisher made last week in referring to economic pessimists as "Eeyores," after Winnie the Pooh's grumpy friend.

"By itself this slump is enough to trigger a U.S. recession: its effects on real residential investment, wealth and consumption, and employment will be more severe than the tech bust that triggered the 2001 recession," Roubini said.

Housing has accounted, directly and indirectly, for about 30% of employment growth during this expansion, including employment in retail and in manufacturing producing consumer goods, he said.

In the past year, consumers spent about $200 billion of the money they pulled out of their home equity, he estimated. Already, sales of consumer durables such as cars and furniture have weakened.

"As the housing sector slumps, the job and income and wage losses in housing will percolate throughout the economy," Roubini said.

Consumers also face high energy prices, higher interest rates, stagnant wages, negative savings and high debt levels, he noted.

"This is the tipping point for the U.S. consumer and the effects will be ugly," he said. "Expect the great recession of 2007 to be much nastier, deeper and more protracted than the 2001 recession."

He also sees many of the same warning signs in other economies, including some in Europe.
Rex Nutting is Washington bureau chief of MarketWatch.


TOPICS: Business/Economy
KEYWORDS: economicforecast; eeyore
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Is Nouriel really Willie Green?
1 posted on 08/25/2006 12:45:29 PM PDT by Toddsterpatriot
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To: Mase; 1rudeboy; expat_panama; Petronski

Eeyore ping!


2 posted on 08/25/2006 12:46:10 PM PDT by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot

I think this guy's a Clintonista.

BTW, if he knows so much, how come he's still working? :)


3 posted on 08/25/2006 12:46:23 PM PDT by RexBeach
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To: Toddsterpatriot

"Recession will be nasty and deep, economist says"

Is that like "mad, bad and dangerous to know"?


4 posted on 08/25/2006 12:47:09 PM PDT by L98Fiero (Evil is an exact science)
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To: Toddsterpatriot

Well, if an economics professor says it, it must be so.


5 posted on 08/25/2006 12:47:27 PM PDT by showme_the_Glory (No more rhyming, and I mean it! ..Anybody want a peanut.....)
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To: Toddsterpatriot
"Eeyore"

?

6 posted on 08/25/2006 12:47:29 PM PDT by KoRn
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To: Toddsterpatriot

Could be. Ford might take itself private which explains why the stock is up today. Maybe Lucent should take itself private. Oops, too late, voted on the merger already, we're French now.


7 posted on 08/25/2006 12:47:56 PM PDT by RightWhale (Repeal the law of the excluded middle)
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To: KoRn

The longfaced donkey from Winnie-the-Pooh


8 posted on 08/25/2006 12:49:15 PM PDT by A Balrog of Morgoth (With fire, sword, and stinging whip I drive the RINOs in terror before me.)
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To: Toddsterpatriot

I miss Willie, he was so much fun to poke with a stick and watch fly off the handle....


9 posted on 08/25/2006 12:51:03 PM PDT by Abathar (Proudly catching hell for posting without reading the article since 2004)
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To: L98Fiero

i think hes right, interest rate swings in the past 6 years have been far too dramatic, thanks to the so called maestro mr greenspan. i dont know about a severe recession, but the bill is coming due for ALL households with higher rates, fuel costs, and reduced wealth effects!!


10 posted on 08/25/2006 12:51:16 PM PDT by nocommies
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To: KoRn

11 posted on 08/25/2006 12:53:00 PM PDT by pgyanke (Christ embraces sinners; liberals embrace the sin.)
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To: nocommies

Newtons Third Law as applied to economics. Still seems to hold true.


12 posted on 08/25/2006 12:53:53 PM PDT by L98Fiero (Evil is an exact science)
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To: RexBeach
He is Clintonista. Whenever, I see these types of stories, I do a Google on the person opining. He donated $500 to Liberman back in 2004 when Joe was still a Democrat in good standing.

Also, he served as Senior Economist for International Affairs, White House Council of Economic Advisers, 1998-1999

13 posted on 08/25/2006 12:56:29 PM PDT by GWB00 (Barbara Streisand barely made it out of high school.)
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To: Toddsterpatriot
Good thing I'm cashing out before the recession hits. Then my next home purchase... should be eh - a buyer's dream! Maybe I'll shop for a beach front mansion if he's right on the money. ;-)

( No more Olmert! No more Kadima! No more Oslo!)

14 posted on 08/25/2006 12:57:13 PM PDT by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
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To: nocommies
i think hes right, interest rate swings in the past 6 years have been far too dramatic

That's right! Just looking at the last 5 years we see interest rates (on the 10 Year T-Bond) have climbed from 5% all the way up to 4.791% today.

We're obviously doomed.

15 posted on 08/25/2006 12:57:43 PM PDT by Toddsterpatriot (Why are protectionists so bad at math?)
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To: GWB00

Doggone if these guys aren't feverishly trying their hardest to talk this economy down into a basketcase!


16 posted on 08/25/2006 12:59:49 PM PDT by Obadiah
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To: showme_the_Glory

His may be the typical PFA theory of economics professors-Plucked From Air.

vaudine


17 posted on 08/25/2006 1:00:50 PM PDT by vaudine
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To: Toddsterpatriot

its only when the tide goes out, that you see who is swimming naked.


18 posted on 08/25/2006 1:01:24 PM PDT by oceanview
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To: Toddsterpatriot

"arguing that the collapse of housing would bring down the rest of the economy"

Just weeks ago everyone was talking about the eceomy growing too fast. Now that the effect of the reent interest rate hikes is being felt in the housing market, this bozo talks RECESSION!

What an idiot!


19 posted on 08/25/2006 1:01:29 PM PDT by observer5 (It's not a War on Terror - it's a WAR ON STUPIDITY)
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To: nocommies
but the bill is coming due for ALL households with higher rates, fuel costs, and reduced

I will agree when people stop going to Starbucks and ordering $3 to $4 cups of coffee everyday.

Gas and commodity prices keep increasing and so does Starbucks stock. These are the items that go first when wallets are being pinched. $15 to $20 a week is a half a tank of gas.

20 posted on 08/25/2006 1:01:35 PM PDT by GWB00 (Barbara Streisand barely made it out of high school.)
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To: Toddsterpatriot
Roubini...was a senior economist in the White House and the Treasury Department in the late 1990s.

Gee, I wonder which administration THAT was?

21 posted on 08/25/2006 1:01:55 PM PDT by COBOL2Java (Freedom isn't free, but the men and women of the military will pay most of your share)
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To: Toddsterpatriot

Wonderful point! Why does everybody sees these things negatively?


22 posted on 08/25/2006 1:02:42 PM PDT by GWB00 (Barbara Streisand barely made it out of high school.)
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To: Toddsterpatriot
...Roubini repeated his call that the U.S. would be in recession in 2007

Just in time for the presidential campaigns. What a coinkydink!

23 posted on 08/25/2006 1:03:04 PM PDT by COBOL2Java (Freedom isn't free, but the men and women of the military will pay most of your share)
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To: Toddsterpatriot

Yeah, and that 10-yr bond rate was what, about 16% during the Carter days?

I remember money market rates at 16%, so that should be about right.

Wait a minute, we survived that...


24 posted on 08/25/2006 1:03:15 PM PDT by SaxxonWoods (Free Iran! WARNING! Forbidden Cartoon: .. . *-O(( :-{>. . . .)
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To: Toddsterpatriot
We're all gonna die!!!!

25 posted on 08/25/2006 1:03:29 PM PDT by Lazamataz (Islam is a perversion of faith, a lie against human spirit, an obscenity shouted in the face of G_d)
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To: vaudine

PFA?

More like "POOHA".

Or maybe the 'A' in your acronym would more accurately represent another word that you sit on.


26 posted on 08/25/2006 1:04:33 PM PDT by MrB (You can't reason people out of a position that they didn't use reason to get into in the first place)
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To: goldstategop
I'm cashing out before the recession hits. Then my next home purchase... should be eh - a buyer's dream!

Good luck with that strategy, I am still waiting for Southern California real estate to go back to the prices they were in 1963

27 posted on 08/25/2006 1:04:38 PM PDT by GWB00 (Barbara Streisand barely made it out of high school.)
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To: KoRn
Eeyore?

Rokkiee.

Sniroo.

Petloou.

If you don't understand, you are clearly not a Prestige Freeper.

28 posted on 08/25/2006 1:04:58 PM PDT by Lazamataz (Islam is a perversion of faith, a lie against human spirit, an obscenity shouted in the face of G_d)
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To: Toddsterpatriot
While many economists share Roubini's concerns about imbalances in the global economy and in the U.S. housing sector, he stands nearly alone in predicting a recession next year.

He's not really alone...leftists are hoping for a recession. Pelosi, Reid, The Swimmer, Hitlery, and the entire cabal of lunatics at moron.org are hoping and wishing for painful economic times to fall upon Americans.

29 posted on 08/25/2006 1:05:47 PM PDT by Recovering_Democrat (I am SO glad to no longer be associated with the party of "dependence on government"!)
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To: Toddsterpatriot
Photobucket - Video and Image Hosting
30 posted on 08/25/2006 1:06:46 PM PDT by A.Hun (Common sense is no longer common.)
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To: Toddsterpatriot

keyword
ECONOMICFORECAST

attached for future reference in 2007


31 posted on 08/25/2006 1:06:57 PM PDT by VOA
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To: COBOL2Java

Clearly the guy wants "in" to a Democrat administration following the 2008 election, and he's doing his bit for "the cause" to try and talk gloom and doom so that the Demo/Commies running for Prez can wail and gnash their teeth about the worst recession since 1801... Folks, this is just one of the early shots in what will be a planned all-out assault by the media and the other usual suspects intended to make Americans feel insecure and to plant the seeds for a Demo/Commie coup...


32 posted on 08/25/2006 1:06:59 PM PDT by The Electrician ("Government is the only enterprise in the world which expands in size when its failures increase.")
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To: GWB00
I was kidding.... the Democrats seem to be the only ones praying for the economy to tank. And they're as mad as hell it hasn't happened yet. From how I look at it, I don't consider that a winning strategy for a political party.

( No more Olmert! No more Kadima! No more Oslo!)

33 posted on 08/25/2006 1:07:03 PM PDT by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
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To: GWB00; RexBeach

Yep, Dems pumping up the gloom and doom right before the election. We've seen it for the last two cycles, 2002 and 2004.


34 posted on 08/25/2006 1:07:22 PM PDT by FreedomPoster (Guns themselves are fairly robust; their chief enemies are rust and politicians) (NRA)
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To: showme_the_Glory

HOOVER ECONOMY!
35 posted on 08/25/2006 1:08:07 PM PDT by Recovering_Democrat (I am SO glad to no longer be associated with the party of "dependence on government"!)
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To: Obadiah

I just had a flashback to the 2000 election, during which
Greenspan was tightening...and tightening...and tightening
...and the stock market was falling...and falling. I seem
to remember then-candidate Bush warning that the economy
was slowing at that time...and guess who was accusing him
"trying to talk down the economy"?


36 posted on 08/25/2006 1:09:59 PM PDT by Purrcival (DemocRATs - working hard, on a daily basis, to ensure that terrorists win.)
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To: Recovering_Democrat; showme_the_Glory

"HOOVER ECONOMY!"

...Bush's fault.


37 posted on 08/25/2006 1:10:57 PM PDT by Purrcival (DemocRATs - working hard, on a daily basis, to ensure that terrorists win.)
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To: Toddsterpatriot

The 2001 recession, if compared to other recessions, was chicken feed. It wasn't even close to anything else.

Having said that.... We're DOOOMMMMMEEEED!


38 posted on 08/25/2006 1:12:20 PM PDT by The South Texan (The Democrat Party and the leftist (ABCCBSNBCCNN NYLATIMES)media are a criminal enterprise!)
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To: Lazamataz; Toddsterpatriot

"We're all gonna die!!!!"

...Bush's fault.


39 posted on 08/25/2006 1:12:24 PM PDT by Purrcival (DemocRATs - working hard, on a daily basis, to ensure that terrorists win.)
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To: A Balrog of Morgoth
"The longfaced donkey from Winnie-the-Pooh"

Ah yeah, I remember him now.

40 posted on 08/25/2006 1:19:29 PM PDT by KoRn
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To: Purrcival

Bush is doing so badly, he's lost 1/9 of the Solar System!

Badda-boom.


41 posted on 08/25/2006 1:20:35 PM PDT by SaxxonWoods (Free Iran! WARNING! Forbidden Cartoon: .. . *-O(( :-{>. . . .)
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To: RexBeach

"Roubini is a professor of economics at New York University and was a senior economist in the White House and the Treasury Department in the late 1990s. His firm focuses largely on global macroeconomics. "

Yup. Clintonista.


42 posted on 08/25/2006 1:21:06 PM PDT by EQAndyBuzz ("If you liked what Liberal Leadership did for Israel, you'll LOVE what it can do for America!")
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To: Toddsterpatriot

Forgive me, but it seems most of these so-called economics gurus can predict economic trends about as well as local meterologists can predict what this coming winter will be like in western PA.


43 posted on 08/25/2006 1:21:12 PM PDT by fatnotlazy
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To: Toddsterpatriot
The United States is headed for a recession that will be "much nastier, deeper and more protracted" than the 2001 recession,

Well, that's not really all that hard.

My question is: did he use Keynsian economic theory to come up with this? If he did, we can ignore his comments pretty completely...as pretty near everything since the early 80s has been impossible under that model.

44 posted on 08/25/2006 1:26:08 PM PDT by lepton ("It is useless to attempt to reason a man out of a thing he was never reasoned into"--Jonathan Swift)
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To: A.Hun

Someone should put Cherthoff's face on Chicken Little.

Neat pic.


45 posted on 08/25/2006 1:28:44 PM PDT by 308MBR (Dar el Harb feels one 1,400 year long "Jihad" is enough for one planet. Bye, goat pokers.)
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To: Toddsterpatriot

Trying to "talk down" the economy in time for the next presidential election.

Think we can guess his political party?


46 posted on 08/25/2006 1:32:47 PM PDT by 3niner (War is one game where the home team always loses.)
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To: L98Fiero

I saw nasty and deep in a movie that was from the back section of the video rental store... LOL


47 posted on 08/25/2006 1:32:51 PM PDT by MD_Willington_1976
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To: Recovering_Democrat

Politicians aside, he is not alone in his beliefs in a 2007 recession. Listened to Peter Schiff of Euro Pacific capital on bloomberg yesterday, very compelling in his argument for a 2007 recession. Housing collapse will be tipping point.


48 posted on 08/25/2006 1:34:24 PM PDT by caresistance
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To: Toddsterpatriot

Bring it on!I like lower interest rates.


49 posted on 08/25/2006 1:35:31 PM PDT by INSENSITIVE GUY
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To: SaxxonWoods

Pluto is no longer a planet? Definitely Bush's fault.


50 posted on 08/25/2006 1:47:37 PM PDT by Purrcival (DemocRATs - working hard, on a daily basis, to ensure that terrorists win.)
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