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Tuesday, April 28, 2009

Roubini Says U.S. Stress Tests Not ‘Serious,’ Banks Insolvent

By Carlos Torres

April 27 (Bloomberg) -- A persistent recession and mounting unemployment will leave the U.S. financial system “insolvent,” implying the stress tests performed by regulators weren’t rigorous enough, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.

Losses at U.S. banks and broker dealers will swell to $1.8 trillion, almost 100 percent more than the current amount, as the economic slump lasts at least through this year and the jobless rate climbs to 12 percent by 2010, Roubini said today at the CFA Institute’s annual conference in Orlando, Florida.

The losses would exceed the $1.4 trillion in capital that banks currently have, meaning “the system in the aggregate looks insolvent,” Roubini said.

The rate at which the U.S. economy contracts will diminish from the 6 percent annual pace in the fourth quarter to about 2 percent in the last three months of 2009, he said. Still, Roubini estimated the jobless rate will reach 11 percent by the end of this year and keep rising as companies retrench.

Policy makers assumed the rate would reach 10.3 percent in 2010 in the “more adverse” of U.S. regulators’ two scenarios in the stress tests to determine how much capital banks may need over two years.

“The stress tests are not really serious,” he said, predicting even the more adverse outcomes predicted by officials will be overtaken by events.

To contact the reporter on this story: Carlos Torres in Washington at ctorres2@bloomberg.net
Last Updated: April 27, 2009 12:22 EDT

Monday, April 27, 2009

Economic Contraction to Slow, Roubini Says (Correct)

By James Kraus

(Corrects to last name in headline)

April 27 (Bloomberg) -- The U.S. economic contraction will slow from 6 percent in the last two quarters to 2 percent by the fourth quarter, economist Nouriel Roubini said in an interview with the Washington Post and Newsweek.

Growth will reach 0.5 percent next year rather than the 2 percent anticipated by most economists, and unemployment will be well above 11 percent, Roubini added.

The end of the contraction probably still won't be felt until the beginning or middle of 2010, Roubini estimated. The European and Japanese economies will remain in recession until the end of next year, Roubini said.

The U.S. is in the midst of a U-shaped rather than L-shaped recession thanks to government intervention, which may need to be extended to a temporary takeover of banks because of the large amount of problem assets, the economist added.
Last Updated: April 27, 2009 04:46 EDT

Tuesday, April 21, 2009

Roubini Says Stocks Rebound Is a 'Bear Market Rally'

April 21 (Bloomberg) -- Nouriel Roubini, the New York University professor who predicted the financial crisis, speaks with Bloomberg's Bernard Lo about the outlook for global stocks. Roubini, speaking yesterday in Hong Kong, also discusses the U.S. banking industry and his forecast for the nation's economy. (This is an excerpt. Source: Bloomberg)

Economist Nouriel Roubini Says He’s “Still Bearish”


April 20 (Bloomberg) -- Nouriel Roubini, the New York University professor who predicted the financial crisis, said that he was “still bearish” and that an economic recovery is going to take “longer than expected.”

Corporate earnings will “surprise on the downside,” Roubini said in a speech in Hong Kong today. “Lots of banks, even the better ones, are going to be in trouble.”

Banks around the world have reported $1.3 trillion in credit losses tied to the housing market collapse since 2007. The deficits, which spurred the first simultaneous recessions in the U.S., Europe and Japan since World War II, pushed the American government to pledge $12.8 trillion to stabilize the banking system and revive economic growth.

The Standard & Poor’s 500 Index, which tumbled 38 percent in 2008, has rallied 29 percent after sinking to a 12-year low on March 9. Roubini said that day that the S&P 500 is likely to drop to 600 or lower this year as the global recession deepens.

George Soros, the billionaire hedge-fund manager who made money last year while most peers suffered losses, said on April 6 that U.S. stocks weren’t at the start of a bull market yet because the economy is still shrinking.

“The current rally is a bear-market rally,” Roubini told reporters after his speech. “I don’t expect a 50 percent adjustment that I expected two years ago, but this is a dead-cat bounce, sucker’s rally, whatever you want to call it.”

Holding Cash

Roubini’s view contradicts that of investor Marc Faber, who said on April 13 that the S&P 500 may rise to 1,000 in the next three months as government spending boosts bank profits.

Markets are “way ahead” of real economic data and this recession will last at least 24 months, Roubini said. He predicted China’s economy will grow 5.5 percent in 2009, which is slower than the 8 percent expansion the Chinese government is targeting.

Roubini has stayed away from “risky assets” including equities, and 95 percent of his savings have gone into cash.

“Reserving capital, compared with losing 50 percent of it, is good,” he said.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
Last Updated: April 20, 2009 04:06 EDT

Nouriel Roubini: US to Grow 0.5% Next Year Apr. 20 2009

Mon. Apr. 20 2009

Nouriel Roubini, chairman of RGE Monitor & the famed economist who predicted the crisis 3 years ago, says the U.S. and UK's prescriptions for their banks are just the opposite of the tough advice given to emerging markets in the Asian financial crisis. He speaks to CNBC's Martin Soong.

Nouriel Roubini Obama Plan Too Little Too Late

Nouriel Roubini On The Economic Situation What's Next 14 apr 2009

Nouriel Roubini On The Economic Situation What's Next part 2 14 apr 2009

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