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Page added on September 25, 2011

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Roubini and Soros Say The U.S. Already in A Double Dip Recession and Warn of Uprising

Roubini and Soros Say The U.S. Already in A Double Dip Recession and Warn of Uprising thumbnail

Dr. Doom Roubini has grown even more pessimistic since he put a 60% probability of a U.S. double dip in 2012 just about three weeks ago.  Business Day reported that speaking at a press conference in Johannesburg on Sep. 20, Roubini now says, ”The US is already in a recession although it will not admit it.” and that the rest of the world would not be insulated from the effects of another global meltdown. (Clip Below)

Regarding Greece and Euro Zone, Roubini thinks Greece would do best to default on its debt and leave the euro zone, and that Europe needs to step up austerity measures: .

Eerily, George Soros also said almost exactly the same in a CNBC interview (Clip Below).  Soros believes the U.S. is already in a double dip recession, and that “a number of smaller euro zone nations could default and leave the single currency area.”  Soros also sees Europe could be “more dangerous” to the global financial system than the Lehman Brothers in 2008, due to “Euro zone policymakers repeatedly following the wrong policy shifts.”

But there’s a reason Boubini earned his “Dr. Doom” reputation as he made an even more ominous prediction that there would be protests as well in the world’s largest economy.

“There is growing inequality all over the world. We have already seen middle-class unrest in Israel. Germans have smashed fat cats’ cars…..As we go into another recession, there will be unrest in the US.”

Interestingly, Business Day quoted Roubini that he was not averse to state involvement in the economy and held up Singapore — which had state ownership of firms and joint regulation and free markets — as an economy that might be shielded from global shocks.

EconMatters Commentary

While we are a bit surprised that Roubini seems to have lost total faith in capitalism by embracing a somewhat socialistic structure of theSingapore Model, we have to admit, on first blush, we (along with the markets) are sufficiently freaked out by both Roubini and Soros asserting the double dip status of the United States.

However, that feeling quickly dissipated as we think about the definition of recession – two down quarters of GDP, or when National Bureau of Economic Research (NBER) declares one, and realized the U.S. so far has not met these conditions yet.

We do believe Europe now holds the key as there’s a distinct risk that the U.S. could be pushed over the recession edge by the Euro Zone debt crisis due to the interlinkage of the global financial system.

On the other hand, the current euro zone debt crisis is quite similar to the debt ceiling fiasco in the U.S. a while back.  The bloc has an inherent structural weakness – central currency without a central political governing body.  But eventually there will be resolution, be there a Greek default and leaving the currency union, or a super-roid-charged bailout package as the stakes are too high for a Euro collapse.

Meanwhile, the U.S. economy could be facing a tough patch in the next two years or so, but the odds are still in favor that backed by its tremendous natural and human resources, the country could pull through and resume growth.

Roubini has been consistent with his double dip recession gloom and doom for the past three years; however, Soros’ track recordsuggests that his recession talk could be nothing more than a reflection of his current trading position, knowing his influence over the markets, rather than an objective economic assessment.

EconMatters



8 Comments on "Roubini and Soros Say The U.S. Already in A Double Dip Recession and Warn of Uprising"

  1. Kenz300 on Sun, 25th Sep 2011 4:15 pm 

    quote — ” “There is growing inequality all over the world. ”
    ————————

    The top 2% are doing quite well. The rest no so well.

  2. Alan Cain on Sun, 25th Sep 2011 8:10 pm 

    Not having formally declared a recession doe not mean that there is not an underlying recession taking place, and the numbers the US put out are so frequently “adjusted” in employment and other areas that it is very hard to put faith into those numbers for decisions by those of us with relatively minor holdings. Evidence from the past (go look for yourself if you don’t think so – I am not going to do your homework) suggests that a very (REAL) conservative policy on the part of small investors is wisest. Of course, churn is what gives the managers of funds profit, so why not stir the stew…

    Greece should get out of the euro without delay before the Germans and other “investors” suck them totally dry. What next? Sell the acropolis?

    Italy, too, though they kind of are legal morons given their charging two seismologists with failure to predict earthquakes (and wanting 68 million dollars from them for their “failure”), and with their amazing fantasy prosecution and conviction of Amanda Knox.

    I appreciate that the euro zone has given the area some recent stability, but that game seems played out.

    Oh, say, can you say, “the United States of Northeastern America”? The United Brotherhood of the South? With such a deep disparity we are developing here in the US, I can imagine rather extreme resistance to new and deeper taxation, or to the kind of austerity measures North Europe is compelling on the southern Europeans.

    May you live in interesting times.

  3. pike on Sun, 25th Sep 2011 8:48 pm 

    The bigger the pop the less wealth for the middle class will be available + peak energy shit will go down hill even faster.

    With out a healthy middle class nobody will be left to oppose the rich.

  4. Plantagenet on Sun, 25th Sep 2011 10:09 pm 

    Alan is right. The Obama administration has been fudging the economic numbers for some time, only to adjust them down later. They reported 0.3% growth in the last quarter—there is an excellent chance that when these numbers are eventually “corrected” it will turn out the double dip recession began in the second quarter of 2011.

  5. rangerone314 on Mon, 26th Sep 2011 1:56 am 

    Question:

    If for arguments sake, imagine the government says there is 5% GDP growth and inflation is 3%, and say that GDP adjusted for inflation grew roughly 2%.

    Now imagine if in reality the inflation rate is 6%. Then your GDP adjusted for inflation is actually shrinking.

    Can anyone say this is not the case?

  6. Newfie on Tue, 27th Sep 2011 2:03 am 

    America “could pull through and resume growth”

    Ha ha ha ha. And pigs will fly. We are now in the zone of peak oil. And the era of growth is now over. None of these debts can be repaid without growth. The system is going to crumble and fall apart, bit by bit. A slow painful death by a long drawn out contraction. Enjoy!

  7. CBlum on Wed, 28th Sep 2011 2:14 am 

    We’re bargaining with a billion chinese and a billion indians who want to replace our middle class western overconsumption.
    Even with laissez faire corporate treatment you can’t get cheap oil from a rock or shale – the low hanging fruit has been consumed decades ago. Steady state, no growth is the only way forward.

  8. CBlum on Wed, 28th Sep 2011 2:16 am 

    unless we find the elusive unicorns or magic wands

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