Mr. Roubini, Please Take a Seat 51 comments
-
Font Size:
-
Print
- TweetThis
From the gloomster Nouriel Roubini, on April 23, 2009:
"Today we present some of the main conclusions of the recently released update to the RGE 2009 Global Economic Outlook: The global economy is in the middle of a synchronized contraction that will push global growth into negative territory in 2009 for the first time in decades. This will be the worst financial crisis since the Great Depression and the worst global economic downturn in decades. Global trade volumes face their sharpest contractions of the postwar era – trade is expected to contract 12% in 2009 due to the severe and prolonged global demand slump, excess capacity across supply chains and the continued crunch in trade finance."
Mr. Roubini, please have a seat. The data simply does not support your old, tired, gloomy claims.
1. US. Exports are rebounding sharply. You may have been able to claim that trade was collapsing in the final months of last year as consumers everywhere shut their pocketbooks, but the international wheels of commerce now seem to be spinning well again. The US economy is not collapsing. Export data points to stabilization.
2. There is no "continued crunch in trade finance." Whether you look at the TED spread, or the Libor/OIS spread, they are well below the peak of late October '08.
3. There is now a significantly growing list of tangibles that have bounced from their year-end lows. What is probably most notable is that capital goods orders are now up. We are not caught up in your "negative-feedback loop" that will eventually turn into a depression.
4. What is most notable from the past two weeks is bank earnings. Although many like Roubini choose to focus on small increases in allowances for bad debt over the next 1-2 years, what many failed to note was the incredible earnings based on extension of credit by banks in Q1. For instance, Wells Fargo (WFC) took advantage of the drop in interest rates to issue more than $100 billion of mortgages in Q1 alone. Revenues almost doubled to $21 billion, including Wachovia’s contribution, and helped the company overcome $3.3 billion of charges from unpaid loans. The allowance for credit losses totaled $23 billion. If those new loan origination rates continue for Wells, that's $400B in new loans for 2009 against the $23B reserved for potential losses in 2009 and 2010. Looks pretty bullish to me. In fact, not all banks increased loss allowances.
So Mr. Roubini, please sit down. Things may not be completely back to normal. But there is no doubt that conditions aren't as dire as you continue to claim.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 51 comments:
oh yeah having your trading head handed to you most likely.
No where to go but up eh?
We'll see. Oh one more thing, notice the 1000's of ships sitting in Asia with nothing to do? what it that about I wonder.
Roubini was right - there is no argument for you.
I would add that Roubini is looking forward (something Cetin is alsways claiming to do), as the continued additions to housing inventory (due for the next 2 1/2 years, see article on shadow inventory) pound that key market into the dirt.
altaman: "post-election buyers remorse" . . . well said.
mtt04: perhaps all those moored ships are conceptual art. I have read that bad art flourishes in bear markets.
December 26, 2008: “…US department stores reported record numbers of shoppers…” “I am sure you'll read about retail gloom elsewhere…” And everyone but you was right.
January 01, 2009: “Unemployment's Surprisingly Large Drop.” "…The majority is always wrong." And so are you. I will use you as a contrarian indicator: When you turn negative, I will go long.
January 13, 2009: “Banks are No Longer Failing.” Great call!
I can keep going but what is the point. You are clearly a broken clock.
you can fill the banks with money (our tax money)
you can fill the shelves in stores...
BUT IF YOU DON'T FUND THE CONSUMER...it is all for nothing, except the "few investors" who are trying to convince "those sitting on the sidelines" that it is "time to get back in" ...mainly so they can DUMP THEIR ALREADY BATTERED STOCKS TO SOMEONE ELSE...in the "last hurrah!"
no consumer...and RETAIL goes down...
banks, even full of Obama liquidity, WILL NOT LEND TO THE AVERAGE CONSUMER...
...about the only thing pumping up the banks does, is help small biz STAY IN BIZ ...a little longer...mostly for the profit of those banks...because without a "turnaround" in the consumer economy...just about everyone CAN EXPECT THINGS TO GET WORSE...
...this is a plan OK... "A LOSING ONE!"
screw the banks, AND PUMP THE BUCKS (which are the taxpayers anyway...INTO THE WALLETS OF THE TAXPAYER/CONSUMER...so he
KEEPS THOSE "SMALL BIZ" ALIVE with "purchases" ...they can't last with more and more credit from the banks...
THEY NEED TO SELL STUFF! ...not get deeper in debt on high interest loans from banks (which are borrowing cheap from the gov and loaning out HIGH to small biz.)
this cycle IS A STALL ...and the ONLY ONE REALLY BEING HELPED IS THE "DAMN BANKS AGAIN!"
flashrob
like, ever notice that they spin GDP or whatever like IT'S ONLY DOWN 1-3-5% ...ARE YOU FOR REAL!!!
reality is: if HOME PRICES have fallen by 30% or better in many mkts, car sales OFF IN THE HIGH THIRTIES ... if UNEMPLOYMENT is near 10% EVEN BY GOV NUMBERS...
(fantasy numbers in my estimation...there are places in Europe where they report as high as 50% unemployent numbers) ...so in a global recession, why do we think were doing ASTRONOMICALLY BETTER (it's easy to fudge the numbers.)
So, would you mind telling me WHEN THE BULK OF NUMBERS based in the REAL WORLD are down in many important areas by 20-40%...how in hell can GDP BE ONLY DOWN in the lower end of "single digits!"
YOUR COMPUTATIONS MAY BE RIGHT...but what the "numbers" you are using to base them on...well, like I say, your in "fantasy land!"
People, out in the REAL WORLD know IT'S BAD...and if you don't start addressing these issues WITH REAL SOLUTIONS...like "funding the consumer" instead of the damn banks...IT WILL ONLY GET WORSE!
FLASHROB
2. TED spread? Wouldn't have a clue.
3. Tangibles, is that commodities? Are people buying this to make stuff, or are is it Goldman Sachs buying as a speculation?
4. Bank earnings? What earnings would they have without free money from the government.
On Apr 26 02:50 PM Cetin Hakimoglu wrote:
> Why are so many people rushing to the defense of Roubini? Following
> his advice wont make you money, and isn't that the whole purpose
> of investing?
It's time to revolt against the propaganda... Report abuse for each of his comments that has the link to his blog.
On Apr 26 02:25 PM mtt04 wrote:
> I'd ask a simple question of the writer - where were you 6 months
> ago?
>
> oh yeah having your trading head handed to you most likely.
>
> No where to go but up eh?
>
> We'll see. Oh one more thing, notice the 1000's of ships sitting
> in Asia with nothing to do? what it that about I wonder.
>
> Roubini was right - there is no argument for you.
This time around, there were plenty of others before Roubini - they just faded into obscurity, while he retained a platform.
You are behaving as if you believe you are personally responsible for re-instilling the American people's faith in equities. Ignoring the desirability of this, I must bring up the issue of POSsibility - have a look at your net rating. Clearly . . . CLEArly, your approach is not winning folks over.
If you won't educate yourself on history, at least consider educating yourself in the basics of argumentation.
And yes, dcb does, in fact, rule.
Roubini is extremely intelligent, but needlessly pessimistic. Much of what he says is accurate, but he seems to get off on reminding everyone how negative economic conditions are. That is what i dislike about him.
That said I do see some of your points in the US. The question is whether stimulus plans will continue to work the magic and how many stimulus plans we can offer.
I am an optimist yet at the same time a realist. Unfortunately I notice a turd in the swimming pool. Ray Dalio put it best and here is what he had to say to Fortune in March.
Most people, says Dalio, think that a depression is simply a really, really bad recession. But in reality, the two are distinct, naturally occurring events. A recession is a contraction in real GDP brought on by a central bank tightening monetary policy, usually to control inflation, and ends when the central bank eases. But a D-process occurs when an economy has an unsustainably high debt burden and monetary policy ceases to be effective, usually because interest rates are close to zero, and the central bank has no way to stimulate the economy. To compensate, the value of debt must be written down (risking deflation) or the central bank must print money (a trigger of inflation), or some combination of both.
It is clear we are in a D-process (Depression) with more to go. At the same time I think we have learned alot from the last time and I think the Fed and the World has additional tools.
Stocks declined in PE for a decade prior to entering this period. So a 20% decline from here is reasonable but not 40% in my opinion. In conclusion it is important to recognize what we are in for what it is. That said I am happy with my stock holdings and we will come out of this and earn money once again.
I am actually starting to think Roubini is too optimistic- growth in 2010 and a U-shaped recovery? The more I read and understand this crisis, the more I think an L-shaped 'recovery' is likely.
And, Oh, by the way, seeing Cetin the Cretin is your primary fanboi is really all one needs to know to understand the value in your writing.
Frankly, everyone on here who is pumping some sort of uber-bullish scenario is obviously pushing a personal agenda for their own gain. I know it, you know it, and everyone else knows it.
Yes, there has been some deceleration in the pace of economic decline, but the big question is whether that is temporary leading to a renewed decline, or at best the beginnings of a long-term economic malaise.
We all know, and by "we" I mean absolutely everyone, that the best case scenario for this economy is to flatten out into a long term coma drowned in large scale public debt. That's the best case - the odds are just as good that we see continued significant decline as the housing market bottoms over the next two years (followed then by a coma of 5 to 10 years).
The process of deleveraging is a slow one -- as of now everyone knows the economy is going to continue to contract; however ,its baked into the models and prices. Only when it becomes clear that deflationary declines will outpace current projections will the market begin its next leg down. That very well could mean a sideways market until late 2009, and then a significant continued decline.
N
On Apr 26 03:13 PM Jasper M wrote:
> Cetin: People are rushing to defense of Roubini because he did what
> few others did: Predicted the Trouble.
> I would add that Roubini is looking forward (something Cetin is alsways
> claiming to do), as the continued additions to housing inventory
> (due for the next 2 1/2 years, see article on shadow inventory) pound
> that key market into the dirt.
>
> altaman: "post-election buyers remorse" . . . well said.
> mtt04: perhaps all those moored ships are conceptual art. I have
> read that bad art flourishes in bear markets.
>
economic sectors later this year; probably those sectors most
related to government spending, inventory reductions, and
exports. My most informed hunch is that the upturn probably
will not last long because of all the other drags on the economy.
It seems likely we are in a W-shaped recession. The middle
tip of the W is the chance to repair some holes in our portfolios.
I wonder how you arrive at the notion that the housing market has hit bottom, when available ARM reset horizons indicate two more waves of inventory arriving by the end of 2011. Reference the article on shadow inventory, I believe it was either here or Minyanville (got to get more fluent with saving these things). Note the last wave is bigger than what we have seen so far.
Mack, while I wish it were true, there are clearly lots of folks who Don't know. Yet. Reality is patient.
Prechter speaks of "the point of recognition", in the aftermath of a dead trend, where the majority of participants finally do realize the situation. in Elliott terms, this is in the "third of a third" of the steepest move down. We clearly aren't there yet.
He has tossed of a guesstimation of that being at the beginning of 2010. Personally, i think that is a little early - I would say Next Spring.
Time will tell.
The thing I dislike about many of the comments above is they don't take to task the Good News Economist's four points that he believes shows the economy's coming back; they're more of a personal nature.
If he's so wrong, why not properly point out how and why he's wrong, instead of firing away with all the personal vitriol?
After all, everyone who can change his own diaper knows Roubini's consistently negative view.
Why not objectively look over the positive side when presented? I honestly don't understand it; it's very childlike, from the Gen Xers & Ys I suppose.
Thank you GNE for the article. I appreciate it very much.
does the poor fellow not have a right to his opinion?
Bank "earnings" ? Are you kidding me? Nobody actually believes those phonied-up numners. Were you an investor in the Bernie Madoff Ponzi scheme? Reported bank earnings make Bernie Madoff look like a choir boy!
Thank you very much for your calm and reasonable response. You don't get very much of that on this site when you disagree with the majority of commentators.
Trust me, I get all your points and you made them well, except about "cetin," and I don't know about his comment value; but if he's as you said, then I'd ignore him. He'll go away.
But even if he is a cad attempting to guide folks to his overly one-sided positive site, who knows, perhaps he's right.
This site has a lot of potential, and in fact is already a great site. Agree?
But the youngsters of Gen. X & Y make a lot of almost slanderous (and useless) personal comments about authors they disagree with and also toss in a lot of Marxist ones at their pleasure. They're free to do so, but I don't think it helps authors hone their writing skills, as comments should.
Now, as to one comment you made, let me say I suppose I've been around so long that I'm immune to analyst comments, whether negative or positive, because I don't relate to "detesting" someone I don't even know -- no matter what they say on TV or radio.
themackattack wrote:
"Further, it suggest the type of blind optimism or willful deceit that has been perpetrated by so many of the shucksters in the financial media that many of us recognize and detest."
You see Mack, I don't care if they're all "blindly optimistic" or pathologically negative, because I'm not going to follow them anyway.
My first rule in investing is this: Never at any time under any circumstances buy or sell a stock because someone (an analyst or otherwise) touted that move on TV or radio.
The rule has been a good one for me. Perhaps others should adopt it.
Thank you again for your response, and I hope our comments begin at least a slight change toward a more reasonable tone on this site.
Thank you for bringing civility to the criticisms and answering the article's points intelligently.
My only issue with your comment is that "Good News Economist" is completely upfront about the point of view he is expressing. There is no surprise in the positive spin placed on the information in his articles. His profile declares that he is trying to counterbalance his perception of negative bias in the media's presentation of news.
A robust discussion from differing perspectives helps illuminate these subjects much better than a slavish acceptance of a star's prognostications. This article clearly served the purpose of getting vigorous discussion started. "GNE" need not necessarily be right to be helpful.
Very good point! I agree completely with your entire comment. Thank you.
And I might add that, we definitely need a little optimism; about the only other place to find it is from Larry Kudlow. (I may stand corrected because I don't watch much news, financial or otherwise.)
But let's say that GNE cherry picks good news out of a mostly rotten barrel. Is that not what ABC, CBS, CNN, FOX, NBC, PBS, and the rest do?
Hey Larrysyr, tell a friend you'd like to cheer up to dive into their news shows one night and see if he can finding an uplifting comment! He's liable to end up checking in Bellvue before midnight, right?
On Apr 27 11:01 AM Larrysyr wrote:
> themackattack -
>
> Thank you for bringing civility to the criticisms and answering the
> article's points intelligently.
>
> My only issue with your comment is that "Good News Economist" is
> completely upfront about the point of view he is expressing. There
> is no surprise in the positive spin placed on the information in
> his articles. His profile declares that he is trying to counterbalance
> his perception of negative bias in the media's presentation of news.
>
>
> A robust discussion from differing perspectives helps illuminate
> these subjects much better than a slavish acceptance of a star's
> prognostications. This article clearly served the purpose of getting
> vigorous discussion started. "GNE" need not necessarily be right
> to be helpful.
Sorry, I meant to write this, to complete the thought:
But let's say that GNE cherry picks good news out of a mostly rotten barrel. Is that not what ABC, CBS, CNN, FOX, NBC, PBS, and the rest do on the negative side? No good news ever from them!
On Apr 26 02:08 PM Dave Wrixon wrote:
> Sorry, but I still have more inclination to listen to him that you.
> To quantify that a little much much much more!
On Apr 27 01:09 PM Cetin Hakimoglu wrote:
> Markets surging yet again today, The higher the market rallies the
> more irrelevant Roubini and Krugman become to the public.
On Apr 27 12:26 PM ArtfulDodger wrote:
> Larrysyr:
>
> Sorry, I meant to write this, to complete the thought:
>
> But let's say that GNE cherry picks good news out of a mostly rotten
> barrel. Is that not what ABC, CBS, CNN, FOX, NBC, PBS, and the rest
> do on the negative side? No good news ever from them!
On Apr 26 11:15 PM Terry Finn wrote:
> Thank you "Mr. Nouriel Roubini, Please Take a Seat" in the WINNER's
> CIRCLE. Thank you for not cooking your "NUMBERS" like all the Wall
> Street and Washington thieves. My 401K is up 30% over the last 18
> month's simply from following your predictions. You have been spot
> on. The consumer has quit spending and that is all one needs to know.
> Are those 600,000 folks losing there jobs each month going to be
> buying more. I don't think so. It is so simple, just look around.
> The fancy stores are empty. The upscale restaurants are empty. The
> jets are empty. We ain't seen nothing yet.
Going by numbers, u can say the worst is over in terms of contraction we have seen in q4 gdp, lets chk numbers:
1) IMF more than 4 Trilion in writedowns
2) Moodys 260-375 addition RMBS writwdowns
3) JPM 400 BN more writeoff
4) Citigroup analyst saying buy financial puts
5) PIMCO -Total 5 Trillion in toxic assets
If we dont believe Roubini we can leave him, but what about the others. And if what is said above is true where is the capital going to come for these financial companies to maintain there capital ratio.
Case-shiller future points to more than 40% in home value decline.
Do u need more data.....what abt retail sales it went down :(
I am not a pessimist but a realist ...if a) any of the above change there estimate, b) home price decline stops/stabalize c) unemployment or claims slows ...I would change my view...
Future will tell who is correct, lets see next two quarters how many banks make profit.....
All views are welcome with valid data points....
>This guy's schtick, as "The Good New Economist," is
>to put a positive spin on everything
>by his own admission.
You got it. That's the goal.
@Misha,
>You are clearly a broken clock.
You are right on. The GNE clock always looks for the silver lining.
@Camden,
>The point is the economic conditions
>are changing and Roubini is not seeing it.
Change indeed is constant.
@Lieberman,
>First quarter GDP to be reported later this week
This will be fun to see. I'm betting we come in at negative 2-3%, but clearly will try to find the silver lining if it's lower... ;-)
@jstratt,
>I am an optimist yet at the same time a realist.
Although many think I am a pollyanna, most would be surprised by how pragmatic I really am. (You might not find it at the GNE website... but have a look at some of the other sites on my blog list that I read... including SA... ;-)
@themacattack,
Thanks for bringing us back to the points of the article for real consideration and debate.
1. Whether or not Robini has used the term "negative feedback loop" or not, he is clearly using calculus terms like "second derivatives" to support a mathematical function that motivates his gloomy outlooks even lower. I reject pure mathematics to describe the market, believing that intangible human factors have much more influence than most pure math models can prognosticate.
2. Yes, there are a significant number of reasons to believe that credit markets have thawed significantly. Number 1 among others:
This year’s record bond issuance so far. That was nearly halted in Oct/Nov... but now continues at a record clip...
seekingalpha.com/artic...
3. I believe that the 0 to 6% spread will be in place for as long as necessary. Earnings will continue to improve and as Wells Fargo puts it, if we can keep earning at that rate, capital [on the books] will take care of itself.
@Artful and Larry,
You guys no doubt "get it".
Thanks all for the comments and debate.
GNE
GNE
Look at the SRS ( short Real Estate ). March 6. 115 , last friday 23.
URE ( long RE ) up from 1.50 to almost 4 $.
Long: If you had shifted your 401 into a cash equivalent (T-bills, for example), you could have rode out the drop in peace. Don't blame other people for your omission.
While I have had some small short positions, the vast majority of My $$ has been in T-bills from early 2007 on. If I did it, You could have done it. If you allowed your 401 to stay in stocks, that was your choice.
Mister Market is now giving you a memorable chance to partially reverse your error, and get out now. I don't expect you will, but don't forget you had a second chance.
On Apr 27 05:20 PM The Good News Economist wrote:
> @altaman,
and I welcome feedback.
On Apr 27 12:17 AM Jasper M wrote:
> Mr. Lieberman:
> I wonder how you arrive at the notion that the housing market has
> hit bottom, when available ARM reset horizons indicate two more waves
> of inventory arriving by the end of 2011. Reference the article on
> shadow inventory, I believe it was either here or Minyanville (got
> to get more fluent with saving these things). Note the last wave
> is bigger than what we have seen so far.
>
> Mack, while I wish it were true, there are clearly lots of folks
> who Don't know. Yet. Reality is patient.
> Prechter speaks of "the point of recognition", in the aftermath of
> a dead trend, where the majority of participants finally do realize
> the situation. in Elliott terms, this is in the "third of a third"
> of the steepest move down. We clearly aren't there yet.
> He has tossed of a guesstimation of that being at the beginning of
> 2010. Personally, i think that is a little early - I would say Next
> Spring.
> Time will tell.