Nouriel Roubini the Macroeconomist Extraordinaire

(Time)

The opportunities for global growth on a sustained basis are quite positive. Right now the basic building block of global demand , the US consumer, is faltering; therefore there is a lack of aggregate demand relative to supply. The supply has been rising because China and emerging markets have been investing so much in new factories and new productive capacity. A lack of demand relative to excess supply--that’s what the global recession is.

You have to have a complete rebalancing of the global economy. The global imbalances are not sustainable anymore.

(From Dec. 2009 issue of GQ)

I have spoken before of how I believed there existed a very real danger of slipping into a depression economy or have the “double-dip” recession model enacted upon us. I believe the danger still exists but there are many signs pointed in the other direction as well.

Roubini speaks of an “L-shaped” model in terms of his predictions for American economic recovery, and I think he holds the most accurate take on economics available. The “double-dip” is the “W-shaped” model that I spoke of before and it looks like the “L” or perhaps the optimistic “elongated U” are the far more likely graph of US economic growth.

The media calls him “Dr Doom,” and I guess that makes me “Dr Doom Jr” because I am less optimistic that we will balance the global economy. But if there was ever any question as where I get my economics, I would have to cite Roubini.

Let us not forget that he predicted the housing market burst and the coming of the global economic recession. It is important to hear what he has to say at this stage and I find it strange how often his assessment mirrors my own:

Roubini’s Three Major Concerns about current US Economy

1. The banks that “still have bad assets weighing on them, remain unable and unwilling to lend.”

2. The “US households that are increasingly indebted and decreasingly employed.”

3. The corporations that are “improving balance sheets by cutting jobs and cutting costs other than increasing revenue.”

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The big question here:

Why in the years and months before the economic crisis was it only “bubble bloggers,” Roubini and a handful of Democrats who warned of the coming housing market bubble bursting and the resulting recession from the burst?

There is no question that Federal Reserve Chairman Ben Bernanke responded aptly to the situation and that the Congressional bailout measures were indeed necessary. What remains to be seen is if the same people who would so readily jump to rescue a sinking economy would have the foresight to see the coming of a “double-dip” recession or if they would warn of it if indeed they did. I believe many financial “experts” are people who only understand talking-up the market and have long since given up on objective assessments on economics.

Reality Check: Economics in America

Let it be said that I am not bought off and not invested in how much money you make one way or the other.

I am one of last people on the web that is willing to tell the truth and attempt to remove all the shadowing and spin that resides over all that is the media.

Allow me to plain:

We are headed for a depression.

I repeat this as a man with three businesses and a successful career in marketing said this statement to me.

A math teacher of high credentials has said to same to me in the past year.

You won’t hear this from the bought and paid for economists who sat on their hands and let our economy crumble beneath us as they remained mute.

While the word ‘depression’ in regards to economics is about to appear on the FFC Banned Words List there is much to be understood about what awaits us.

I’ll remove as much jargon as I can.

The economy will go up. But then it will come back down again.

They call me a “W” in terms of my economic perspective in that I believe we will regain strength in the market in coming quarters. But I think these will be temporary gains and ultimately we will fall back into a recession cycle that will lead to a depression.

Most media economists tell you that they are a “V” which to me just denotes that they are blindly optimistic or much more likely bought and paid for.

Some maintain that there will be no improvement and they are labeled the “L‘s”.

And some still think we will have gradual and slow recovery that is unhampered and they are labeled as “U‘s”.

Anyone like myself who speaks of a forthcoming American Depression would squarely fit into the “W” or the “L” camps.

However, the notion that all hope is lost is a false one.

Most of us ‘money-savvy’ people already know that fortunes can be made in depressions and that the wealth of the nation will not dissolve into thin air but rather will be distributed down to the people who have the intelligence and the foresight to take advantage of the downturn.

This is just a sliver-lining though. Each family should take real steps right away to build up the value of your home, maximize your portfolio and be prudent about major expenses.

But it’s important to realize that if we are going to prove me, a math teacher and a successful business man wrong that this nation will have to refocus itself on consumer spending.
If all of America continues to tighten it’s belt in this endless fashion then you begin to see why some predict this outcome at a latter date. Most say about three years and I would estimate a little longer span of time but the same end result.

eTrade and the Recession

I have been intentionally over-paying those little everyday expenses like tipping and things like not using the local ‘insider’ coupon clip.

It’s been awhile for me personally since I bought a product online, but supporting eTrade is another way is try to do your little part to shoot some life into the economy while your online.

I plan to buy the next gift for someone special via online.

Net-Trade is complex for the ordinary consumer to understand but there are multiple ways to support domain hosts, web loggers, local businesses and local markets.

Change starts at home.

Making your home more energy efficient in every way possible is a sound investment. Energy costs are not likely to drop in any foreseeable future.

This is just one of many steps I suggest you take to affect real change in your local environment and community.

The federal government can only do so much. Each bailout and stimulus they devise will ultimately fail if the Consumer Markets do not participate.

We need to take the time to educate ourselves enough as citizens to better understand our role at this stage in our national economy.

We all can make some difference.

We all can effect some amount change within our respective spheres.