NYU Economist Says the Worst Is Yet to Come For U.S. Economy

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Top Tier Gear USA

Well known mainstream economist and professor at New York University Nouriel Roubini doesn’t think we’re out of the woods just yet. In fact, the famed theorist who foresaw the stock market crash and economic meltdown of 2008, thinks things are going to get even worse in the very near future.

There’s a reason that Roubini is often referred to as Dr. Doom (not to be confused with the other Dr. Doom, economist Marc Faber):

“Valuations in stock markets are stretched: price-earnings ratios are now high, while growth in earnings per share is slackening, and will be subject to further negative surprises as growth and inflation remain low. With uncertainty, volatility and tail risks on the rise again, the correction could accelerate quickly,” Roubini wrote in a Project Syndicate column.

Meanwhile, war could erupt in the Middle East amid rising tensions between Israel and Iran, which could further disrupt economic recovery and global financial markets next year.

In short, 2013 is shaping up to be a very volatile year.

”As consumers, firms and investors become more cautious and risk-averse, the equity-market rally of the second half of 2012 has crested,” Roubini wrote in the column.

“And, given the seriousness of the downside risks to growth in advanced and emerging economies alike, the correction could be a bellwether of worse to come for the global economy and financial markets in 2013.”

Via The Daily Crux and Newsmax Money News

The majority of Roubini’s forecasts have been right on target, which is likely why some of business’ best and brightest regularly attend his speeches, including the likes of Bill Gates and Warren Buffet.

If Roubini is right about this one, then look out below, because this latest correction in stocks has been just a small taste of what’s to come.

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  • blah

    Mad Max here we come.

  • Locus

    In the stock market the traditional methods which center on opportunity and optimism (trying to pick winners) by directly infusing those ‘winners’ with capital, a self-fulfilling endeavor… have become overshadowed by methods that pivot on third party dis-opportunity (picking losers) where through sports-book style margin calls and puts, so-called investors place bets on who is going down first, how far, how hard.

    The virtual money that changes hands in these negative karma transactions is completely brokered by third parties, not even the true competitors of a targeted business will benefit, and earlier players’ winnings are almost exclusively comprised of recent players’ losses. It is a pyramid scheme of ill will.

    It is a vulture culture.

    Now add to that a backbone of millisecond speed hair-trigger trading that picks an observed trend line that is expected to flatten out, sets triggers to bail and attempts to milk the trend with a flood of small transactions issued in near real time that ‘pinch’ from one side of the line and ‘flick’ over the other. Because humans are still involved the trend-lines still form, but we are approaching the threshold where the humans are becoming confused by the volatility and unpredictability of the market. Human traders are now completely swamped by electronic trading noise and robot trader volume — thankfully they are starting to say ‘screw this’ and withdraw from the process altogether.

    Under Glass-Stegall there were banks and there were bottom feeders.

    Welcome to the post Glass-Stegall world your FDIC insured dollars are playthings, and no one ever lost their job trying to skim off of ill will.

    The whole mess needs a total reboot.

    • Stef

      Good stuff.

  • In other words there is no money there and a totally correction would be 0 or negative to generate more debt.