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View Full Version : 8 Really, Really Scary Predictions


Nightowl
12-10-2008, 11:10 PM
CNN Money - Fortune (http://money.cnn.com/galleries/2008/fortune/0812/gallery.market_gurus.fortune/index.html)

Dow 4,000. Food shortages. A bubble in Treasury notes. Fortune spoke to eight of the market's sharpest thinkers and what they had to say about the future is frightening.

Nouriel Roubini

Known as Dr. Doom, the NYU economics professor saw the mortgage-related meltdown coming.

We are in the middle of a very severe recession that's going to continue through all of 2009 - the worst U.S. recession in the past 50 years. It's the bursting of a huge leveraged-up credit bubble. There's no going back, and there is no bottom to it. It was excessive in everything from subprime to prime, from credit cards to student loans, from corporate bonds to muni bonds. You name it. And it's all reversing right now in a very, very massive way. At this point it's not just a U.S. recession. All of the advanced economies are at the beginning of a hard landing. And emerging markets, beginning with China, are in a severe slowdown. So we're having a global recession and it's becoming worse.

Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak - with a growth rate of 1% to 1.5% - that it's going to feel like a recession. I see the unemployment rate peaking at around 9% by 2010. The value of homes has already fallen 25%. In my view, home prices are going to fall by another 15% before bottoming out in 2010.

For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It'll be hard and challenging enough. I wish I could be more cheerful, but I was right a year ago, and I think I'll be right this year too.

More Predictions (http://money.cnn.com/galleries/2008/fortune/0812/gallery.market_gurus.fortune/index.html)

BirdGuano
12-11-2008, 01:30 PM
We will dig out of this. And when we do, I hope for a back-to-basics society - where banks and other lending institutions promote real growth and long-term value for the economy, and where American families have rediscovered the peace of mind of financial security achieved through saving and investing wisely. We need to return to the culture of thrift that my mother and her generation learned the hard way through years of hardship and deprivation. Those are lessons learned that the current crisis is teaching us again.

+1

BirdGuano
12-11-2008, 01:33 PM
Historically, the way you make money in times like these is that you find things where the fundamentals are unimpaired. The fundamentals of GM are impaired. The fundamentals of Citigroup are impaired.

Virtually the only asset class I know where the fundamentals are not impaired - in fact, where they are actually improving - is commodities.

Farmers cannot get a loan to buy fertilizer right now. Nobody's going to get a loan to open a zinc or a lead mine. Meanwhile, every day the supply of commodities shrinks more and more.

Nobody can invest in productive capacity, even if he wants to. You're going to see gigantic shortages developing over the next few years. The inventories of food worldwide are already at the lowest levels they've been in 50 years.

This may turn into the Great Depression II. But if and when we come out of this, commodities are going to lead the way, just as they did in the 1970s when everything was a disaster and commodities went through the roof.

ltow
12-11-2008, 09:01 PM
I have a commodity that I hope comes into demand: AOL disks.

sandyd
12-11-2008, 09:32 PM
Itow.....I read to put them on fruit trees to discourage birds.....it's the 'new scarecrow'

:lol:

Coyote
12-11-2008, 10:20 PM
I think now would be a good time to sit tight. Let things shake out.

Invest in yourself and maybe a little bit for future sale. Happiness is zero debt. Get a second job (even if it's just being a janitor) and pay off your bills. Keep the rest in cash.

If you want to gamble, don't cry (or ask for a bailout) when you lose.

Ross
12-12-2008, 06:17 AM
Roubini said ....
I see the unemployment rate peaking at around 9% by 2010.

Surely this is a very dubious figure .

BabyBoomers have lost their retirement capital .
They will now be forced to remain in the work force instead of
retiring , substantially enlarging the available labor pool.

Think double digits.

Fiddlerdave
12-12-2008, 06:41 AM
Roubini said ....


Surely this is a very dubious figure .

BabyBoomers have lost their retirement capital .
They will now be forced to remain in the work force instead of
retiring , substantially enlarging the available labor pool.

Think double digits.In the April figures for March.

Christy
12-12-2008, 07:15 AM
Hmm the USA senate has chosen not to bail out the car industry (I have no opinion if this is right or wrong).
Is does mean 2,5 million people could be out of work before the end of this year.
That might add a bit to the downward spiral. Seems we are way past the point of no return.

BirdGuano
12-12-2008, 01:32 PM
Hmm the USA senate has chosen not to bail out the car industry (I have no opinion if this is right or wrong).
Is does mean 2,5 million people could be out of work before the end of this year.
That might add a bit to the downward spiral. Seems we are way past the point of no return.

I believe those people are toast, with or without a "bailout".

GM just announced capacity cuts of 250K units.

Merry Grinchmas....

ltow
12-12-2008, 10:45 PM
Merry Grinchmas
and a Happy Scrooge Year!

I like the ring of that

Sysiphus
12-12-2008, 11:05 PM
So I take it this means mutton will be on the table in 2009, instead of lamb?

Greybeard7
12-13-2008, 12:42 AM
I think now would be a good time to sit tight. Let things shake out.

Invest in yourself and maybe a little bit for future sale. Happiness is zero debt. Get a second job (even if it's just being a janitor) and pay off your bills. Keep the rest in cash.

If you want to gamble, don't cry (or ask for a bailout) when you lose.

Well, I'm not happy with the current returns on my mutual funds. BUT, I'm not crying or bailing out of them. They are my insurance policy against the potential for extreme inflation.

Cash can be a losing proposition if extreme inflation occurs. And the time to move could be a very short window of opportunity.

Diversify. Any single bet could be a very big winner, or a very big loser.

JMHO

GB7

leistb
12-13-2008, 01:25 AM
Hmm the USA senate has chosen not to bail out the car industry (I have no opinion if this is right or wrong).
Is does mean 2,5 million people could be out of work before the end of this year.
That might add a bit to the downward spiral. Seems we are way past the point of no return.

It could also be said the unions chose not to bail out the car industry.