Riding high in April, shot down in May - Roubini and other headlines

Back at my old familiar place, on my laptop in the middle of the night, updating the Fresh Talk blog, now accompanied by the Michael Buble version of the old Frank Sinatra standard 'That's life" in the background.

"I thought of quitting baby, this heart wasn't going to buy it"

Yes, it's hard to stay away from this blog, even during my vacation days Thanksgiving week. As I review my Gmail inbox, I acknowledge my compulsion for Google news alerts has again created for me a a pile of unread emails. Let's sort through this together....


One my email alerts is for Nouriel Roubini, the economist who has been eerily accurate about the twists, turns and tumbles of the U.S. economy. Here is Roubini on the Web and in my Google news alerts...

State governments in better shape to handle The Great Disruption than The Great Depression
But troubles may only be beginning for state governments, which will be one of the epicenters for what New York University economist Nouriel Roubini predicts will be the "most severe recession since World War II, much worse and longer and deeper than even the 1974-75 and 1980-82 recessions."

How many U.S. banks will fail? A bailout stretching to infinity
Many experts think the FDIC list is much too short and that it is a form of "window dressing" to keep the public from getting panicky. That is almost certainly true. If residential and mortgage failures pick up and consumers default on more and more of their obligations, the actual number of banks which fail could rise sharply between now and the beginning of 2009..New York University Professor Nouriel Roubini predicts that the head count of banks taken over by the agency will go well into the hundreds.

Why is this time different?
So what does Mr. Sunshine conclude? Check this out lads and lassies: "The current recession may end up being three times as long and at least three times as deep (in terms of output contraction) than the last two." Whew!! That's one dour dude, dear friends. Yet, if you look at the market, and the data that is being released on a daily basis, Roubini's case is well founded, as we may be entering the early stages of a deflationary spiral, something not seen to this degree since the 1920s.


Roubini told us so
In early October I predicted – in an interview for Tech Ticker – that the Dow could fall towards the 7000 level by next year and that US equities would fall by 50% relative to their 2007 peak. Such predictions were considered too bearish and extreme at that time but, at the rate at which equities are falling now with this acceleration of a savage deleveraging by leveraged institutions (and even disorderly sell-off by many unlevered players too), the Dow may reach the 7000 before year end rather than in 2009 and we are getting close to a 50% drop in overall equity prices from their peak.


TK: Roubini's bad news extravaganza can last only so long, right? As Sinatra himself said - speaking for all Americans now, "I know I'm going to change that tune, when I'm back on top in June."