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Thread: Recession Will Be Nasty And Deep, Economist Says

  1. #1
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    Recession Will Be Nasty And Deep, Economist Says

    Recession will be nasty and deep, economist says
    Housing is in a free fall and is pulling the economy down with it, Roubini says

    http://www.marketwatch.com/News/Stor...4D3%7D&symbol=

    By Rex Nutting, MarketWatch
    Last Update: 4:59 PM ET Aug 23, 2006

    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 on Wednesday, Roubini repeated his call that the U.S. would be in a recession in 2007, arguing that the collapse of housing will 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 year-over-year.

    "This is the biggest housing slump in the last four or five decades: every housing indictor is in free fall, including now housing prices." — Nouriel Roubini, president of Roubini Global Economics.

    "This is the biggest housing slump in the last four or five decades: every housing indictor is in free fall, including now housing prices," Roubini said. 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 the 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
    No One Knows Everything. Only Together May We Find The Truth JG


  2. #2
    Chana3812 Guest
    It's a tough time to be a real estate broker. I'd better find a new career !!

  3. #3
    Cloak & Swagger Guest
    Chana, it's a tough time to be anything in America right now...
    well except for being a criminal, business is booming for street and corporate crime syndicates...oh yeah, and government crime syndicates as well.

  4. #4
    PhilosophyGenius Guest
    Chana, what are you hearing about this up comming real estate bust?

  5. #5
    AuGmENTor Guest
    Worry about knowing how to take care of yourself without creature comforts. That's gonna be the hot commodity. But what will people pay me for my vast store of information. Well, maybe I can just supervise them doin the things I tell them that will keep them alive! And if they rise up, I'll burn a tent, and say the woodland creatures did it. And if they want to live through the night, they better follow me!!!!

  6. #6
    AuGmENTor Guest
    my version of operation northwoods BWAHAHAHAHAHAHAHAHAHA!!!!! (thats' so funny to me on sooooo many levels!)

  7. #7
    Chana3812 Guest
    Quote Originally Posted by PhilosophyGenius
    Chana, what are you hearing about this up comming real estate bust?
    It's bad already!! New home sales are down, seriously down for three months now. Existing homes are on the market much longer than anticipated. Rents are skyrocketing also. Where are people supposed to live?? In the gutter??

    Everyone knew that the market would cool down... it couldn't keep going the way it was going. But the market has CRASHED RAPIDLY. Even the Fed reacted and decided to Not raise the rate, but it didn't help. People are scared. People are broke.

    The United States has the highest mortgage foreclosure in history at this moment, even higher percentage wise, than the great depression. Our country is going broke, in my humble opinion.

    It's bad.

  8. #8
    AuGmENTor Guest
    It's bad already!! New home sales are down, seriously down for three months now. Existing homes are on the market much longer than anticipated. Rents are skyrocketing also. Where are people supposed to live?? In the gutter??
    I don't know, I mean I know home sales are lagging (new and existing), but they could not have maintained the pace they were at even a year ago. I'm plugged into this on a local level, and I just don't see it. I literally can't do all the work I have, and I sub alot of it out. Forty grand on a kitchen renovation is the norm in my neck of the woods. I'm not seeing all of this brokeness. But since I keep hearing how bad it's getting nationally, I'm making sure that I'll be able to weather it out up norf. (By weather it out I mean like for the rest of our lives.) I hope I wake up from this. It's like a dream, and I don't like knowing everything I do. Maybe I'll forget it and become a neocon!

  9. #9
    Chana3812 Guest
    Aug, remodeling is Up. because people will spend their last dime on a remodel, hoping that it will help the Sale.

    Real estate is a very localized market. Some places are still hot. But it the nationwide averages that make up the whole picture.

    Also, that mortgage default rate should have FRICKING BELLS GOING OFF EVERYWHERE, but no one seems to be noticing. They are blaming it on Hurricane Katrina.

    Glad you're staying busy - wish you could come do my kitchen

  10. #10
    PhilosophyGenius Guest
    Yeah, the price of housing around the bay area has literally went up by at least a hundred thousand.

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