ROUBINI SAYS THERE IS MORE PAIN TO COME

“WHEN THE USA SNEEZES THE WORLD GETS A COLD”
Roubini (April 7, 2009).

“But this time around it not just sneezing, it’s a severe case of pneumonia!”
(http://finance.yahoo.com/news/Market-bear-Roubini-sticks-to-rb-14876221.html)

When do we get out of the bear market? According to Dr Nouriel Roubini (NY University Stern School) there will be more bad news ahead in the banking and housing sectors and more pressure on consumers. The recent four week long market up turn was a “bear market ralley and not a change in sentiment”. Roubini expects more bad “macro news, earnings news, and financial shocks are going to be worse than expected”, that’s why the recent rise in the stock market represents only a “bear market rally”. Others have called the rally “ a dead cat bounce”. Even a dead cat will bounce if it falls from a great height, so the analogy goes. The term refers to a stock (or market) which in its precipitous fall makes a brief but temporary rise in price. Then, after that rise it continues on its downward spiral.

The blog "Moderate in the Middle" (moderateinthe middle.wordpress.com) noting on February 24, 2009 that is was Bernankes appearance before the Senate Banking Committee) that the DOW was up 245 points (to DOW at 7360) quotes Tony Crescenzi (Chief Bond Strategist of Miller Tabak) states that it was Bernake’s recent signs of leadership and his belief that the banks will get they need and recover …that’s what caused the rally.

What did Bernake say? Bernanke’s Testimony (http://www.federalreserve.gov/newsevents/testimony/bernanke20090224a.htm)
“The principal cause of the economic slowdown was the collapse of the global credit boom and the ensuing financial crisis, which has affected asset values, credit conditions, and consumer and business confidence around the world. The immediate trigger of the crisis was the end of housing booms in the United States and other countries and the associated problems in mortgage markets, notably the collapse of the U.S. subprime mortgage market. Conditions in housing and mortgage markets have proved a serious drag on the broader economy both directly, through their impact on residential construction and related industries and on household wealth, and indirectly, through the effects of rising mortgage delinquencies on the health of financial institutions. Recent data show that residential construction and sales continue to be very weak, house prices continue to fall, and foreclosure starts remain at very high levels.”

But what caused this global credit boom? And why didn't Bernanke do somthing about it before? And if something must change what is it?

To answer those questions you must read the summary of the problem in Rolling Stone magazine. The interesting cartoon of the fat Wall Street Banker ingesting Uncle Sam’s legs as Sam chews on the banker’s feet …tells it all--- except that there is no Middle Class Everyman, in the picture this gross act and being forced to pay for it. The piece tells it all in earthy language. Read it and learn about what is really going on. http://www.rollingstone.com/politics/story/26793903/the_big_takeover/1