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Wednesday, July 09, 2008

Brace Yourselves

By way of Calculated Risk, we learn that Nouriel Roubini, a man who's been predicting the housing crash and recession since long before it became acceptable to do so, was on CNBC's Squawk Box this morning, with this not-so-sunny, but unfortunately spot-on remark:
[B]race yourself for a severe recession in the US and other advanced economies, a serious global growth slowdown and a systemic financial crisis. The worst is ahead of us rather than behind us ...

[T]he temporary drug of a $160 billion fiscal package including $100 billion of tax rebates will boost Q2 growth into positive territory (1% to 1.5% growth in Q2). But that boost is deceptive as it is entirely driven by such temporary tax rebates. The effects of those rebates on consumption are temporary while a half a dozen more persistent shock will lead to a consumption reduction – by late summer –once the effect of the rebates fizzle out. Persistent headwinds hitting consumers on a more protracted basis are: falling home prices, falling home equity withdrawal, falling stock prices, rising oil and food prices, rising debt servicing ratios, falling consumer confidence, falling employment and income generation.
Nuff said. Live within your means....for as long as you're still able to do so.

PS: Glad to see Roubini agrees with me (or I with him, which I guess, given how much I respect his analaysis, is the more accurate statement). Really bummed we're right though.

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