From the same article above. “Dr Roubini said US companies have plenty of cash but are boosting profits by a policy of “slash and burn” on labour costs. “We’ve lost 8.4m jobs and if you include the loss of hours worked it is equivalent to another 3m. We need to generate an extra 450,000 jobs every month for three years to get it back,” he said.
The US non-farm payrolls data released on Friday was better then expected but still showed a net loss of 54,000 jobs.
Dr Roubini said average public debt in the rich countries would rise to 120pc of GDP by 2015 in the rich countries, leaving no scope for a further fiscal stimulus. If they push their luck, they too risk the sort of bond crises seen in Southern Europe this year.
In the US, the fiscal boost has faded, switching to tightening over coming months The lift from the inventory cycle is finished. Capex spending by companies has held up well, but this slowed sharply in July. Housing is already in a double dip. The last support for the US economy is consumption, barely growing at 1pc.
“All we did was kick the can down the road and stole demand from the future,” he said.”
I predict that the dow will go down by 50% within the next 6-9 months as investors realize that the economy is not turning around anytime soon (the housing foreclosure problem has not been solved, it has gotten worse. Commercial real estate has also not been addressed)and that P/E ratios above 20 don’t make sense. I have taken what little I have in the stock market, cashed it out and bought silver eagles with it. I am looking down the road 5-7 years. A recent post had a good video of anthony robbins quoting heavy investors that are his clients that folks might want to watch. Roubibi’s last statement is the most profound for me. I do not trust anyone in DC to think more than the next election cycle (2-3 years) down the road to solve any problem this nation has. We have to have a balanced budget sometime soon and start paying off the national debt (which I realize they want to inflate away, not pay off). Ron paul sounds like a kook only because he is the only one looking down the road 5-15 years and saying the things that need to be done to solve our financial problems.
