Base10Blog
Wednesday, November 21, 2007
 
Market Pessimism Roundup
If you're in the market, today's roundup of news and analysis will not give you confidence. First, Nouriel Roubini recently predicted losses of up to a trillion USD and a hard landing recession in the US. Today, he is gloating that one of the Financial Times bloggers picked up on his forecast of a "generalized systemic financial meltdown."

While it's not hard to dismiss Roubini as a doom-and-gloomer, it's much harder to dismiss Nobel Laureate Paul Samuelson. He concurs that the US is headed for a hard economic downturn in a piece in the IHT. Other economists have commented on his column. Greg Mankiw called it "surprisingly pessimistic." Tyler Cowen writes: "It is amazing how pessimism and the desire to blame will cloud men's minds."

But, Goldman Sachs estimates that total mortgage related losses to financial institutions may be over $2 trillion. It should be noted that this particular economist, Jan Hatzius, predicted that US housing was overvalued by 20% back in March of 2006. (No stretch there really, but it's not like he's not being consistent).

At least what happened to China won't happen to us. The Chinese economy just shrunk by 40%, which, I suppose, is equivalent to the US overcounting GDP by everything west of the Mississippi.
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