Roubini - S&P 500 Could Decline Additional 20-30%

Nouriel Roubini has become renown for having predicted the impending credit and bank crash. He predicts a severe recession and expects markets to decline another 20-30% before bottoming out.

Nouirel Roubini was one of the few economists that rang the alarm before the housing and bank bust.  It doesn't mean he'll always be right but he sounds good talking.  Here's a summary of the key points from the interview above:

  • S&P 500 could fall another 20-30% over the next year.  Roubini believes valuations are too high for an economy in a severe recession.
  • We're in a severe recession.  The recession will last 24 months and take off 4% of GDP.  The recession started at the beginning of 2008.
  • Recovery will be sluggish.  Recovery will not be robust unless banking system problems are solved.
  • The Fed Funds rate will come down to 0%.  That's bad for savers.

For those of you piling into the market now, believing we've hit a low, here's another perspective.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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  • JRodgers

    November 01, 2008

    It is good to listen to Roubini because he offers a cautious tone that balances Wall Street's "buy now" mentality that has destroyed so many. His argument is persuasive, but I am not certain that he is right.

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