Charlie Rose

boris  10/22/2008 02:53 AM Report

Roubini is right on the $$$300 Billion infusion on the Economy that would cause Inflation and an 18months to 2 years Recession is the lesser evil than a Stagflation to support the $$$ and doing nothing of any massive infusion of $$$Billions to the USA Economy would cost USA Economy a very long ride Decades Recession like Japan.

Dr.Robert A. Valenti,NCSP  10/19/2008 01:45 PM Report

Bravo Roubini!

Some Honesty  10/17/2008 12:30 PM Report

Bravo Roubini for telling the truths! Academicians do not get the respect they deserve as they are the only neutral and objective voice in our society. We, Americans, have lived beyond our means for too long and gotten used to it. Our materialistic addictions have been out of control. Bubbles are symptoms of underlying greed and fraud. Now the deep recession is upon us. We are all being punished for our lenient and permissive behavior tolerating excess and over indulgence. The recessions/depression will bring discipline and a sense of reality that money does not grow on trees and is not created in ATMs.. We will learn to tighten our belt and look into the mirror and see that we have grown spoiled as children of the great generation. Do you really deserve what we expect … considering the new global economy and our own mediocre productivity? We have kept on lying to ourselves and the world and believing our own fabricated lies. Did you listen to Obama and McCain? Did you hear them lie? Do you really think we will end our dependence on imported oil in 10 years or resolve our national debt and problems within a decade while in a protracted recession? Can we stop lying to ourselves and stop the next round of frauds! Have we noticed how we continue to act as Ugly-Fat-Spoiled-Conceited-Lying Americans?!

Fred  10/17/2008 07:22 AM Report

I believe Mr Roubini is prescient in his 2006 observations of pending doom but his solutions leave much to be desired. Lowering rates to 0 will cause permanent capital flight at a time when banks need reserves, ensuring another equity injection bailout.

What the Professor fails to realize is that we need a painful cleansing to wipe out the excess malinvestment, along with higher interest rates to attract capital. Yes it will be painful and we'll all be jobless but at least the dollar may survive.

A far better use of this bailout would have been to bailout the FDIC and to pay for the destruction of excess real estate construction, also requring a national moratorium on building for 5 years. That would put a bottom on RE prices by reduced supply. On reduced supply, banks can have less fear about lending into a falling knife.

At the bottom of this are two things-the desire of bank to lend(not) and the desire of consumers to borrow (not). Historically, both of these must be operating at a frentic pace to

for the US to have 'an economy'.

Tax reduction, savings and domestic production are the only long term economic solutions to American economic woes. The time for Pax Americana is over. Bring home the global military and RIF most of it NOW. This will save trillions in spending. Or let the world pay us for our protection. Infrastructure spending would be a good temporary help, better than another 'stimulus' package (all I did with mine was pay off debt not spend it. Congressional morons really knew what they were doing with that last round of spending $ we dont have).

Depressions are always better than hyperinflationary depressions. At least in a depression we may still attract global investment. Guaranteed end of foreign investment when the dollar goes to zero and we're all immediately impoverished.

Any comments here Professor? I do appreciate your work.

jehu  10/17/2008 07:21 AM Report

There is only one solution to this crisis, and it was indicated by Col. Andrew Bacevich in his interview:

The US must begin to dismantle its military. The proceeds of the savings from this must be directed to American taxpayers with tax reductions to offset decade of stagnant wages and income. The Federal budget must be brought into balance with elimination of all unnecessary spending.

Once the exhorbitant costs of empire are reduced, it will be possible for the US to again begin to export. Until then, the work week must be reduced at least to 20 hours.

This is not a suggestion, this crisis is precisely aiming at compelling the US economy to produce such results. However, if we do not take proactive measures along these lines, these very same results will be produced in the worst forms: extremely high unemployment, massive budget deficits, a rapidly slowing international trade environment, and, ultimately, the default of the American government on its obligations.

Joseph Black  10/17/2008 12:57 AM Report

Nouriel Roubini gets zero respect from most of the interviews that he does. It is either because teh interviewers can not deal with the hard facts about our economy or they are idiots. I think Charlie Rose is a great American and a very smart man, which leaves me with the fact that most Americans would rather stick their heads in the sand while our economy goes into a deep freeze.

Bill Berggren  10/17/2008 12:15 AM Report

Wish Rose would get Peter Schiff and Jim Rogers on the show. You can listen to their comments on youtube.

EKK  10/16/2008 10:40 PM Report

Even in faraway Easten I still can touch the shock getting from this financial crisis....

M Chanoff  10/16/2008 09:10 PM Report

I'd like to respond to the comments by Paul Jacobelli and by barrie above:

Jacobelli: Here are the benefits that will accrue to you and your responsible behavior: You will live in a neighborhood that isn't full of foreclosed homes pushing the value of your home down. You will work at or own a business that benefits from paying customers that allow you to make money or keep your job. However, you're right to make the comment. Bailouts need to include somewhat onerous provisions, only generous enough to maintain the economic viability of families or businesses, not to reward them by making them completely whole. For example, mortgage rates should be negotiated down from insupportable to barely supportable. recapitalization should come with much stricter provisions against things like very high salaries for management or dividends for equity holders.

To Barri, Roubini has responded to that question, at least a bit, for example here: http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vDHgWim6Nh8U.asf. Bottom line, we need an asset shift away from non-productive assets like housing toward more productive ones like education and infrastructure.

christine schmidt  10/16/2008 07:08 PM Report

I think the problem started when the dollar was completely disconnected to gold (partially a connection should have been remained money can t be only protected by the believe in production and demand), also when markets started to open worldwide (which is not a bad thing but it was bad that they did so wild and without any concern ) but it teaches us now it comes very bad without financial oversight and rules against highly speculative operations.

Because human nature likes to have more and did not proved yet in the past en present times to be able to control feelings like ambition, greed and selfishness.

Almost anyone on the planet has a little bit of it- therefore correction mechanisms have to be introduced.

I am not too smart but I ask myself if this economist did not studied also history and philosophy- some French men I think it was Voltaire said centuries ago – any paper money no matter where for exactly that reasons gets vaporised – sooner or later for exactly that reasons.

As fare as I understand right now we have 3 problems

1- Trust (medias are also partial responsible by making people additional panic- it is logic that when people see constantly printed dollars or other money coming out from printers that they start to think also when they see reports on how to hide money under the bed” or listen like a brain wash “panic, Turmoil, and financial meltdown”

2- Liquidity- Banks don’t lend enough to each other and much of the money in the system is only virtual money- bys saying right now the system evaporates much money which does not exist anymore

3- Transparency- luck of oversight in a system which nobody really seems to understand well and were Byers and sellers are not visible.

4- To much dependence on commodities like oil and in general dependence form developed countries on import of energies which is necessary to produce and make the economy going up-oil became fare to much o global political and financial player is already in a way money and is since a long time used as a weapon.

I think that the crisis is serious but if right decisions are taken things might go better on middle term well- Anyone should be also clear about it – any determination which is taken now will stabilize but might no cure.

On long term I think oil independence should be a great goal as much as an focus of eventual backing up of valid /money partially on Gold or nature resources like Water.

Backing up paper money only on the trust of an ongoing market demand of production and demand is under the present circumstances from my point of few risky- Because when You make something in order to sell it and depend some how on others than you are in risk of getting depending on others and loos your freedom.

The Fusion from Euro and Dollar on long term in hand with Canada and England might be interesting as an idea on long term if it will be necessary , but I don’t hope so- like an introduction of Northern Hemisphere Super Valid- Supers

On short term I think it should be done like this.

- TAX CUTS!!!!!

- Absolute and strict Government austerity in all areas with exception of health, security, education and alternative energy projects – froze of infrastructure and funsy projects, froze of any project what is not necessary by remembering –Miss Pelosi’s remarkable words “the party is over”.

- Following Europe’s sample of income cuts for Bankers- they started today very enthusiastic with this step and it would be very fine to see such actions also in the U. S.

- even to evaluate to make for 3 or 6 month half payments of all government officials (they surely are patriots and voluntary agree and wont die from hunger either) or high income persons in financial sector who are partial responsible for the problem to smoove down eventual civil upset which might come harsh in the moment when mainstream is affected and as fare as I know- Mainstream will be affected (unemployment 10 percent and also I think inflation at least 10 percent more )

- May be some of the Bankers feel a little bit bad about it and can be animated to make money donations which go directly into the system like healthcare or education – would make a huge impression.

- strong coordination with Europe and introduction of financial oversight until the system is re-established and cant be used like a casino game from speculation

- In U. S I think to put interest rates half percent down would be not so bad, Europe should go one percent down. Is risky but the machine starts to roll better again.

- Not allow of alto speculative operations like weds on falling courses, even future trade in some areas should be evaluated because it can changes add. Ideas about commodities and brings more volatility in the markets

- Introduction of simple models of Buying and selling and who byes and sells on Stock markets and in Banks – laws against the confusing little written parts when common people make deals in Banks about a financial product. Harsh punishments when this laws are broken

- Better education of people in the culture of how to handle money and what means financial markets- TV can be used – like “the money show” or how ever you name it….even in a funny way you can teach people how to use money.

- Introduction of culture of “When I make a loan than it does not mean that I own it “and “what my neighbour has I don’t need always to have” in all kind of level political, social and other level.

Mel  10/16/2008 03:50 PM Report

To Paul Jacobelli: I fit your profile. What we "more responsible" folks get is that the downward spiral of deteriorating neighborhoods due to foreclosures is mitigated and that some people who got in over their heads get a second chance make a go of it, to keep their homes. I think the economy as well as the lives of many families would not deteriorate as badly. Where you draw the line between those who are in too deeply to rescue and those who need a moderate helping hand is always difficult and imperfect, but if done right probably benefits us all economically--to say nothing of fellow feeling for our compatriots.

Robert  10/16/2008 12:49 PM Report

To respond to those who ask "Where is the money going to come from?". Well that's a good question, but we have few options, it's just where we're at.

Option 1.) The next president, and current president Bush must Deficit spend, period. This is basic Keynesian macroeconomics. We should, like Roubini says, invest in infrastructure refresh (bridges roads, etc.) and let's get moving on compressed natural gas for every car in the US in 4 years, and use the energy we have in the US (CNG).

Option 2.) We can follow the Increased taxes plan which is frighteningly similar to what happend after the great depression, and follow in our own footsteps with a loooooong protracted recovery. Read about the depression, and the policies that caused it to linger for decades.

Keynesian economists called on governments during times of economic crisis to pick up the slack by increasing government spending and/or cutting taxes.

Conclusion: To get out of this quickly, we will have to finance more debt, probably alot more. This will have the consequence of the US becoming less of a prominent world power in the world. If we don't finance the recovery, we will have a very long protracted recovery resulting in....again, the US losing our prominence as a world power as others pass us by. We have few options, but wouldn't we prefer to recover from this quickly? If we execute option 1 very very well, we may still end up on top (becoming energy independent on natural gas).

footnote: Why natural gas? Well, I'm glad you asked. Natural Gas can be used in conventional autos with small modifications. It's safer than gasoline. It has a FAR smaller emmision of greenhouse gasses than a "hybrid" (What an absolutly stupid idea that was!), and doesn't involve disposing nasty nasty hybrid batteries (lower total impact to the environment overall). It's easy to set up fueling stations for, and easy to transport. Creation of the CNG industry will add thousands of jobs to domestic companies large and small. Lastly, we have TONS of it right here in the US.

As for ethanol, another bonehead idea, it has a net energy loss to produce it (It takes more energy to make it than you get out of it), it causes a negative environmental impact and it's a waste of food.

Paul Jacobelli  10/16/2008 12:13 PM Report

Can you please tell me what benefits will accrue to those of us who did not buy a house beyond our means, sacraficed a standard of living level so we could pay our mortgages in full and on time for years, did not engage in speculative borrowing and credit extension, etc. If those who risk losing their homes are to get a mortgage re-evaluation what will we get for being responsible borrowers.

Mr. Ig  10/16/2008 12:06 PM Report

Can it be said more succinctly?

http://solari.com/blog/?p=1660

sock puppet  10/16/2008 10:19 AM Report

Anton - wholly agree re Citigroup. A major bunghole of the financial dysfunction. Instrumental in repealing Glass-Steagall, in using SIVs (Structured Investment Vehicles), CDOs (Collateralized Debt Obligations) and other HFVs (Hedge Fund Vehicles). Messrs Weill, Prince, Rubin could all spend time in the stocks for all the abject misery they have caused and are causing. GITMOize em! And Obama soils himself by his association with Rubin. Nader gets my (protest) vote.

barrie  10/16/2008 08:58 AM Report

My question to roubini would be: Is there a viable alternative economic paradigm to the failed steroidal consumer- based credit economy? And don't give me the same old same old marxist solution. My sense is that regionally based economies, even within the US, wherein production and consumption is based on actual need rather than credit and lust for unnecessary commodities figures somewhere in that mix.

I'm looking for a real sense of vision here. Aren't there some minds out there capable of admitting this system has failed, that consumerism will always reach a dead end, particularly given falling wages, minds with a notion of a sustainable economy that meets the needs of all people and encourages economic growth at the same time? Ideas, people?

Marilyn  10/15/2008 06:32 PM Report

And now it begins...the trickle down DOES work when it's loss......."State funding of life sciences, clean energy, renewable energy and higher education will be scaled back as the Commonwealth of Massachusetts looks to close what now appears to be a $1.4 billion budget gap for the fiscal year that began July 1, Gov. Deval Patrick said Wednesday evening.

“As you know, the financial turmoil around the world has now hit home here in Massachusetts,” Patrick said. “Just like families all across the Commonwealth, the state government is feeling the pinch."

sock puppet  10/15/2008 12:47 PM Report

The biggest long-term heist is going to be in the decades of inflation caused by the bailouts debasement of our currency. (Inflation is the only way to get housing prices - to appear to be - up.) Paulson, Bernanke (cum Jesse and Frank James) are robbing us and our progeny for years to come solely to keep the scumbag financial wise-guys (Citigroup et al) in their billion dollar offshore tax free hideaways. -----> Oh religious clerics where are you when I need you. Please reassure me that there indeed is a hell, and that I will be able to recognize the financial scumbags surrounding me.

Ricardo C. Amaral  10/15/2008 04:39 AM Report

Dear Mr. Roubini I posted some information on MR. Martin Wolfs comments section, but the information is for both of you.

I have been writing about the US dollar for the last ten years and I enclosed the link to some of these articles. I also have been writing about the collapse of the US dollar and if you read my article about the US causing this international financial crisis and I gave the exact time when this collapse was going to happen. The collapse arrived right on time.

The next collapse is going to be even worse when the US dollar goes through a complete meltdown, and we have the mother of all international monetary crisis and the end of the line for the US dollar.

People used to laugh about my predictions for a long time even though they all have come to past. Today, there are not many people who are laughing about my predictions anymore.

My last article about the renationalization of Petrobras caught a lot of people's attention.

I sent a copy of that article to all senators and Congressmen in Brazil, and also to various people from Lulas cabinet.

I did the same with the article about China investing $ 200 billion in Brazil, I even had the chance to discuus it with my friend former president Sarney last year.

I have been writing for Brazzil magazine for a long time, but until 3 years ago when the magazine published my first article about China and Brazil, at that time the readers of the magazine China was nil, and the United States was close to 50 percent of the readers.

Since then after Brazzil magazine published a number of my articles about China and Brazil today 45 percent of the readers are from China and the United States readers goes up and down in the range of 23 to 26 percent.

I have been documenting that trend on my articles long before the mainstream media realized what was happening. As the United States disconnects from Brazzil, the China has replaced the United States as our major partner.

.

Anton Grambihler  10/15/2008 03:11 AM Report

When John Reed and Sandy Weill announced on television that Travelers and Citibank were going to merge even though they knew it was illegal, the Federal Reserve said they would be given up to 2 years to get congress to change the law so they would not be in violation. Illegal activity by this new entity called Citicorp was partially responsible for the Enron Default. John Reed was later rewarded by being made chairman of the New York Stock Exchange to help boost investor confidence in the Stock Market.

Now the Financial institutions are going for the juggler to bankrupt the United States.

STOP THE FINANCIAL APPEASEMENTS AND BEGIN PROSECUTIONS.

sock puppet  10/15/2008 01:28 AM Report

Debasement of the currency by bailouts for banks, people, cats and dogs concerns me, but in a eureka moment it hit me that that is indeed intended. They can make a fictive value of homes increase through inflation. And alls right with the world - unless you're hungry due to high food prices. But, alas, I'm sure the financial wise-guys think they can fine tune any troublesome little problems. Targeted subsidies here, tax breaks there, voila problem solved. On to the next BUBBLE.

sock puppet  10/15/2008 12:53 AM Report

Roubini suggested a $300 billion stimulus program because healthy banks without a healthy economy would be a Pyrrhic victory. BUT how does all the bailouts (banks and citizens) not ravage the treasury, the integrity of the currency. Somewhere inflation has to be the result. Depression or deep recession (take your pick) may be inescapable despite any, or all, options chosen.