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August 7, 2006 at 8:25 AM #7121August 7, 2006 at 11:29 AM #31077
powayseller
ParticipantToday, Dr. Roubini puts the chance of a global recession in Q1 07 at 70%. Read here
Are you ready, or do you think he’s kidding?
August 8, 2006 at 7:20 AM #31211ParticipantDr. Roubini explains why non-oil commodity prices will fall, the floating currencies of euro and yen and others will rise as the dollar falls, and that the Fed will pause today and ease in September or November. The slowdown in the rest of the world may be delayed by a quarter or two, but they will slow down too. China, Japan, Europe, emerging markets, Latin America are going to slow down.
He says foreign flight will be next, the dollar will tumble this fall as the temporary factors which held it up are unraveling, and there is a risk of a financial meltdown similar to the 1987 stock market crash and the LTCM fund collapse.
I think most didn’t read his comments, or this thread would have been a mile long. Please take the time to read it, because if what he says is true, there are some serious implications for rebalancing our portfolios by fall.
August 8, 2006 at 7:35 AM #31212technovelist
ParticipantI don’t need to read his comments, as I already knew that the US economy is in real trouble. On the other hand, I’m not sure that “non-oil commodities” are going to fall, at least in dollars, because the Fed can’t print commodities. However, that isn’t the most important point: if there’s anyone here who still thinks there is going to be a “soft landing”, and wants “official” confirmation of how bad things really are, they should probably read the links you sent.
August 8, 2006 at 9:11 AM #31234ParticipantRoubini writes some things I had not read before. For example, he debunks the myth that commodities will keep going up. In a global slowdown, demand for commodities will decline, so the prices will drop. I think commodity prices will drop back to their 2000 levels. Oil will drop too, but not as much.
Roubini also mentions which currencies will appreciate, and warns that international equities (as Peter Schiff recommends) will fall.
His company studies the Flow of Funds reports, and he met with China’s bank and treasury officials, so he has a good insider view. He believes the Chinese will revalue the renminbi later this year, to avoid the tariffs that they might get otherwise. One quick 5% revaluation.
There are many housing bears who believe China will take over global growth when the US slows. He has a list of reasons why that cannot happen. I have espoused that view for many months, but now here is Dr. Roubini saying it too. Perhaps he will be more convincing than I was.
There are many here who are in cash, but in dollars. He says the US dollar will fall.
August 8, 2006 at 11:23 AM #31266VCJIM
ParticipantPoway, I read every word of each article. Very helpful, thank you. It confirmed my need to partially divest of the US dollar.
August 9, 2006 at 6:30 PM #31487Nancy_s soothsayer
ParticipantPowayseller, a personal question if I may be so bold. Where and how are you going to divest, in general terms?
August 9, 2006 at 6:50 PM #31488ParticipantI’m undecided. theplayers had a plan that interest me: a mixture of Treasury bills, CDs, swiss francs, and euros. Please correct me if I’m wrong, theplayers.
I am 95% cash, with 5% in stocks (Berkshire Hathaway, oil and natural gas, and trading bond futures through Chris Johnston). This 5% is meant to increase on the “dismal” 5.5% return from cash. The cash portion is currently in CDs and money markets, but I want to move to Treasury bills (short term only) and some alternative currencies. Roubini seems to think the floating currencies will appreciate vs. the dollar. I am stuck in indecision right now.
I am fairly conservative, so I will not short the homebuilders or lenders.
The economist who so brilliantly predict the future of the economy, don’t go all the way by suggesting where to invest our money. So what good is predicting a recession if you can’t tell people where to invest during a recession?
I am also interested in what Rich is recommending, or perhaps he is not able to post this here. I respect his opinion very much, but have not directly asked him for advice yet. I plan to do so, after he starts his financial business.
August 10, 2006 at 10:17 AM #31546ParticipantPoway, if an economist told you where to invest your money, would you do it? Or would you do exactly the opposite of what was advised?
“The economist who so brilliantly predict the future of the economy, don’t go all the way by suggesting where to invest our money. So what good is predicting a recession if you can’t tell people where to invest during a recession?”
August 10, 2006 at 12:24 PM #31585ParticipantI have not seen an economist who did so.
In a personal e-mail to John Talbott, he recommended TIPS. Because he believes the government CPI numbers. Here is his defense of the CPI: “I don’t think CPI is perfect, but it is hard to believe it is far off or else all bond investors are being fooled by it. Remember, they are lending money at 5% which doesn’t get much of a real return if you are right about inflation levels. ” Needless to say, I ignored this advice.
Since Talbott is wrong about CPI, his investment advice is useless to me.
If I met an economist whom I trust on all points, then I would consider his advice. Roubini is the only economist who fits the bill for me. He is the first economist who sees the big picture, and who forecasts everything that I believe PLUS more. So I look up to him, but not to Thornberg.
Even the guys in the Bubble Bloggers, like Tim Iacono, are bullish on commodities and don’t want to acknowledge that commodities will go down in the global recession. All you have to do is look at the commodities prices in the 2000-01 recession, and see the big price drops. Likewise, Jim Rogers is just a salesman for his commodities index fund, so I wouldn’t implicitly trust him either. In my opinion, he is wrong about the commodity bull market. How can you have a commodity bull market in a global recession? Maybe after the recession? Anyone buying commodities ought to wait until the bottom of the pricing, at the end of the recession. Perhaps that is a good time to get in on commodities, before the next boom.
August 10, 2006 at 12:35 PM #31586ParticipantI agree, my point was you’re stated desire to have economists tell us where to invest. If economists tell us where to invest, and everyone follows this advice, by its very nature would this not be bad advice?
Everyone investing in the same things = price runups = bubbles = price declines = : (
We largely have to think for ourselves primarily looking to economists for data and possible trends, etc.
August 11, 2006 at 10:51 AM #31698ParticipantThe problem is that 99% of economists are wrong. Dean Baker:
“Economists almost never forecast recessions. I happened to
get a copy of the “Blue Chip” top 50 forecasters rojections for 2001, dated Sept. 2000. Not one forecaster in this group projected a recession. In fact,the lowest growth projected by any of them for 2001 was 2.4 percent. Keep in mind, the stock market had already begun to unravel at that point, so it shouldn’t have been too hard to imagine that there would be some economic impact.” – Dean BakerBaker, Roubini, and a few others are more accurate. Even Thornberg has good data, but reaches poor conclusions; he tells people that prices in So CA will flatten for many years until wages catch up so nobody should sell their home! Nobody should cash out and rent! I am familiar with his work, and his conclusions.
Let the sheeple follow the advice of Thornberg, and hold on to their homes.
Economists cannot create a bubble, because they are sheeple too. They just follow the bubble like everyone else.
We have few competent economists. The people who are smart and insightful and courageous enough to go against trends are heroes. Only a few economists are heros; Most are sheeple.
So to answer your question, if a hero economist tells me where to put my money, I would do it. If Roubini said I should buy euros, I would do it. Because he knows MORE than I do on the current situation, so I believe he has a better vision of what will happen.
Someone like Alan Gin or Chris Thornberg, who can’t even see what is going on today, cannot be trusted to give advice. How can you give advice on a fiction reality?
I really need to become an economist. We need a good San Diego economist. We really do!
August 11, 2006 at 10:53 AM #31700ParticipantSo quit bitching and do it.
August 11, 2006 at 11:01 AM #31704ParticipantDo you think anybody would listen to me? I don’t have a PhD in Economics from Harvard, just an MBA from ASU, and I haven’t ever worked in that field. I haven’t worked at all in a long time.
August 11, 2006 at 11:25 AM #31709ParticipantYes, but it will take some time. I personally don’t look to the degrees a person has, I look for the intelligence in their statements. There are a lot of PhDs that never produced anything worthwhile on this planet, and plenty of high school dropouts that produced a lot.
The main thing is for you to decide what you want to produce in this world, and work back from there.
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