While I had originally doubted Nouriel Roubini, I have come to believe he is one of the very few economists who continues to publicly state the true market conditions. He holds no punches, he appears to have no fear at what others think about his predictions and… he is not swayed by the political landscape.
Today, Mr. Roubini sends another warning:
“The stock market is a bit ahead of the real macroeconomic and financial news,” Roubini, a professor at NYU’s Stern School of Business and the chairman of consulting firm Roubini Global Economics, said in an interview with Bloomberg Television in London today. “We’ll have some major banks going belly up that will need to be taken over.”
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Roubini, who predicts loan and securities losses in the U.S. will reach $3.6 trillion, said the stress tests will reveal that some banks need to be taken over and have their good and bad assets separated before being sold to the private sector. He didn’t name which companies he thought would need to be rescued.
What will the U.S. Bank Stress test show? I have a feeling that Roubini is on target with his assessment that some major banks will go bell-up. That is why when I hear an organization, such as Citibank, say they’ve suddenly become profitable, in the hardest of economic conditions the market has witnessed in years, after over a year of unprofitably just doesn’t seem right. It’s nearly impossible, and I believe the stress test will show just how vulnerable the institution (and others) really are.
It has often been said the Stock market anticipates what conditions will be like 6 months from now. If that is the case, the market is being overly optimistic right now. Major banks need to be addressed, unemployment will continue to rise during the year and retail sales are nowhere near recovery.
I’m not trying to be to be negative, people need to be realistic about what we are facing.
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