[IWE] Nouriel Roubini seems to have nailed the econ crisis years ago

[Donald Richards Jr.]

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http://digbysblog.blogspot.com/2008/09/serious-people-by-digby-we-all-know.html


"On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund
and announced that a crisis was brewing. In the coming months and
years, he warned, the United States was likely to face a
once-in-a-lifetime housing bust, an oil shock, sharply declining
consumer confidence and, ultimately, a deep recession. He laid out a
bleak sequence of events: homeowners defaulting on mortgages, trillions
of dollars of mortgage-backed securities unraveling worldwide and the
global financial system shuddering to a halt. These developments, he
went on, could cripple or destroy hedge funds, investment banks and
other major financial institutions like Fannie Mae and Freddie Mac."


Characterizing the bailout plan-

"The Treasury plan (even in its current version agreed with Congress) is
very poorly conceived and does not contain many of the key elements of
a sound and efficient and fair rescue plan.

>snip<

Specifically, the Treasury plan does not formally provide senior
preferred shares for the government in exchange for the government
purchase of the toxic/illiquid assets of the financial institutions; so
this rescue plan is a huge and massive bailout of the shareholders and
the unsecured creditors of the firms; with $700 billion of taxpayer
money the pockets of reckless bankers and investors have been made
fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession.

The
Treasury plan is a disgrace: a bailout of reckless bankers, lenders and
investors that provides little direct debt relief to borrowers and
financially stressed households and that will come at a very high cost
to the US taxpayer. And the plan does
nothing to resolve the severe stress in money markets and interbank
markets that are now close to a systemic meltdown."




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<table cellspacing="0" cellpadding="0" border="0" ><tr><td valign="top" style="font: inherit;">http://digbysblog.blogspot.com/2008/09/serious-people-by-digby-we-all-know.html<br><br><br><b>"On Sept. 7, 2006</b>, Nouriel Roubini, an economics professor at <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/n/new_york_university/index.html?inline=nyt-org" title="More articles about New York University.">New York University</a>, stood before an audience of economists at the <a href="http://topics.nytimes.com/top/reference/timestopics/organizations/i/international_monetary_fund/index.html?inline=nyt-org" title="More articles about the International Monetary Fund.">International Monetary Fund</a>
and announced that a crisis was brewing. In the coming months and
years, he warned, the United States was likely to face a
once-in-a-lifetime housing bust, an oil shock, sharply declining
consumer confidence and, ultimately, a deep recession. He laid out a
bleak sequence of events: homeowners defaulting on mortgages, trillions
of dollars of mortgage-backed securities unraveling worldwide and the
global financial system shuddering to a halt. These developments, he
went on, could cripple or destroy hedge funds, investment banks and
other major financial institutions like <a href="http://topics.nytimes.com/top/news/business/companies/fannie_mae/index.html?inline=nyt-org" title="More information about Fannie Mae">Fannie Mae</a> and <a href="http://topics.nytimes.com/top/news/business/companies/freddie_mac/index.html?inline=nyt-org" title="More information about Freddie Mac">Freddie Mac</a>."<br><br><br>Characterizing the bailout plan-<br><br>"The Treasury plan (even in its current version agreed with Congress) is
very poorly conceived and does not contain many of the key elements of
a sound and efficient and fair rescue plan.<br><br>&gt;snip&lt;<br><br>Specifically, the Treasury plan does not formally provide senior
preferred shares for the government in exchange for the government
purchase of the toxic/illiquid assets of the financial institutions; so
this rescue plan is a huge and massive bailout of the shareholders and
the unsecured creditors of the firms; with $700 billion of taxpayer
money the pockets of reckless bankers and investors have been made
fatter under <span style="font-weight: bold;">the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession</span>.<br><br>The
Treasury plan is a disgrace: a bailout of reckless bankers, lenders and
investors that provides little direct debt relief to borrowers and
financially stressed households and that will come at a very high cost
to the US taxpayer. And <span style="font-weight: bold;">the plan does
nothing to resolve the severe stress in money markets and interbank
markets that are now close to a systemic meltdown."<br><br><br><br></span></td></tr></table>
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