Nouriel Roubini, an economics professor at New York University, first predicted a US recession in July 2006 (which was a very controversial position at the time, but not today).
Now, Roubini said that there's a greater risk to the economy, the mother of all meltdowns:
Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.”
The first step in this path is already happening:
Step one is the worst housing recession in US history. House prices will, he says, fall by 20 to 30 per cent from their peak, which would wipe out between $4,000bn and $6,000bn in household wealth. Ten million households will end up with negative equity and so with a huge incentive to put the house keys in the post and depart for greener fields. Many more home-builders will be bankrupted.
Eleven more steps toward a giant economic catastrope, as outlined by Financial Times' columnist Martin Wolf: http://www.ft.com/cms/s/0/4d19518c-df0d-11dc-91d4-0000779fd2ac.html (Photo: Roubini's website) | Roubini's blog at RGE Monitor - via Linkfilter