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Old 10-23-2008, 02:35 PM   #1
leistb
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Default Roubini Says `Panic' May Force Market Shutdown (Update2)

Roubini Says `Panic' May Force Market Shutdown (Update2)

By Alexis Xydias and Camilla Hall

Oct. 23 (Bloomberg) -- Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

``We've reached a situation of sheer panic,'' Roubini, who predicted the financial crisis in 2006, told a conference of hedge-fund managers in London today. ``There will be massive dumping of assets'' and ``hundreds of hedge funds are going to go bust,'' he said.

Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut interest rates on Oct. 8. Emmanuel Roman, co-chief executive officer at GLG Partners Inc., said today that as many as 30 percent of hedge funds will close.

``Systemic risk has become bigger and bigger,'' Roubini said at the Hedge 2008 conference. ``We're seeing the beginning of a run on a big chunk of the hedge funds,'' and ``don't be surprised if policy makers need to close down markets for a week or two in coming days,'' he said.

Roubini predicted in July 2006 that the U.S. would enter an economic recession. In February this year, he forecast a ``catastrophic'' financial meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a ``sharp drop'' in equities.

Bear, Lehman

The comments preceded the collapse of Bear Stearns & Cos. and Lehman Brothers Holdings Inc. as well as the government seizure of Freddie Mac and Fannie Mae. The Dow Jones Industrial Average, a benchmark for American equities, has lost 37 percent this year, including its biggest daily drop in more than twenty years on Oct. 15.

The Dow average rose 2.5 percent to 8728.73 as of 10:55 a.m. today in New York.

Italian Prime Minister Silvio Berlusconi roiled international markets on Oct. 10, first saying world leaders were discussing shutting down global financial exchanges, and then saying he didn't mean it.

``In a fairly Darwinian manner, many hedge funds will simply disappear,'' Roman said, speaking at the same event as Roubini.

The hedge fund industry is stumbling through its worst year in two decades and posted its biggest monthly drop for a decade in September. Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.

`Very Ugly'

``Things are getting very ugly also in the emerging markets,'' Roubini said. ``The usual saying is when the U.S. sneezes, the rest of the world catches a cold. Unfortunately, this time around the U.S. is not just sneezing, it has a severe case of chronic and persistent pneumonia. It's becoming a mess in emerging markets.''

Developing nations' borrowing costs jumped to the highest in six years today as Belarus joined Hungary, Ukraine and Pakistan in seeking a bailout from the International Monetary Fund to help weather frozen money markets and a slump in commodities. Argentina risks defaulting for the second time this decade.

``There are about a dozen emerging markets that are now in severe financial trouble,'' Roubini said. ``Even a small country can have a systemic effect on the global economy,'' he added. ``There is not going to be enough IMF money to support them.''

Roubini, a former senior adviser to the U.S. Treasury Department, earlier this month said that the world's biggest economy will suffer its worst recession in 40 years.

``This is the worst financial crisis in the U.S., Europe and now emerging markets that we've seen in a long time,'' Roubini said. ``Things will get much worse before they get better. I fear the worst is ahead of us.''

To contact the reporters for this story: Alexis Xydias in London at axydias@bloomberg.net; Camilla Hall in London at chall24@bloomberg.net.

Last Updated: October 23, 2008 10:59 EDT

http://www.bloomberg.com/apps/news?p..._e8&refer=news

Last edited by leistb; 10-23-2008 at 02:36 PM. Reason: Need to post article's URL
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Old 10-23-2008, 03:10 PM   #2
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I gone done broke it.
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Old 10-23-2008, 04:24 PM   #3
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what is a hedge fund......?,thanks.
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Old 10-23-2008, 06:55 PM   #4
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what is a hedge fund......?,thanks.
Kind of like driving down the road at 50 Mph, and throwing wads of $100 bills out of the sunroof.

Hedge fund: http://en.wikipedia.org/wiki/Hedge_fund
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Old 10-23-2008, 11:09 PM   #5
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So....is this like a way of getting us ready for the idea they are gonna slam it down when they panic?
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Old 10-23-2008, 11:10 PM   #6
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So....is this like a way of getting us ready for the idea they are gonna slam it down when they panic?
Yes. You nailed it!
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Old 10-23-2008, 11:43 PM   #7
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I must say that the general mood among people I come in contact with is much more on edge than it was two months ago.

It does feel a little like dry tinder waiting for a match that I really hope never comes.


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Old 10-23-2008, 11:58 PM   #8
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It's going to come . . . I just hope we have more time than a week or so . .. . Dow to 5,000 or lower.
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Old 10-24-2008, 12:28 AM   #9
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I am watching the video now. He has changed his tune somewhat (even more pessimistic) from when I heard him on the Charlie Rose Show the other night. He is now saying that the US may not be able to avoid a "systemic financial meltdown". On the Charlie Rose show, he sounded a little more hopeful. I also just heard him say something about the possibility of a "L" shaped recession, unless the financial problems are fixed. I need to listen to the entire video to get a better understanding of what has changed his mind.

Nouriel Roubini

Last edited by Greta; 10-24-2008 at 01:37 AM.
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Old 10-24-2008, 01:33 AM   #10
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Originally Posted by Greta View Post
I am watching the video now. He has changed his tune somewhat (even more pessimistic) from when I heard him on the Charlie Rose Show the other night. He is now saying that the US may not be able to avoid a "systemic financial meltdown". On the Charlie Rose show, he sounded a little more hopeful. I also just heard him say something about the possibility of a "L" shaped recession, unless the financial problems are fixed. I need to listen to the entire video to get a better understanding of what has changed his mind.

Nouriel Roubini
OK, I watched the video. Holy shit! That was scary.

Last edited by Greta; 10-24-2008 at 01:38 AM.
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Old 10-24-2008, 05:39 AM   #11
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all the big four uk banks shares are down despite the bail out ,and the ftse100 is down 9%,so the bailout isnt working then.
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Old 10-24-2008, 06:24 AM   #12
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RF did you read the thread just for you?
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Old 10-25-2008, 02:47 PM   #13
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I love his monotone delivery
Taleb could learn a lesson
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Old 10-25-2008, 03:30 PM   #14
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I love his monotone delivery
Taleb could learn a lesson
Ayup. I've been reading and watching the many interviews posted on his blog. His very 'matter of fact' delivery makes it all the more chilling.

http://www.rgemonitor.com/blog/roubini

He does need a wardrobe upgrade though. I think he owns exactly one blue dress shirt and tie that he wears to every interview. Maybe it's his lucky shirt?
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Old 10-25-2008, 07:27 PM   #15
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Hmmmm
You never see Roubini and HAL in the same room . . .

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HAL: Well, I don't think there is any question about it. It can only be attributable to human error. This sort of thing has cropped up before, and it has always been due to human error.
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