Tuesday, October 6, 2009

Whom to believe ?......Nouriel Roubini or Marc Faber......

Global recession coming to an end: Nouriel Roubini

Economist Nouriel Roubini, the Chairman of RGEMonitor.com and one of the few people who foresaw the US housing bust that preceded the economic crisis of 2008-09, says the global recession is coming to an end. He, however, added that, contrary to consensus view, it would be a “weak, anemic, sub-par recovery,” and not a V-shaped one.
U-shaped recovery on cards
Roubini, also dubbed Dr Doom for long warning the advent of an economic crisis, said the labour market and consumer spend in the US remained weak. Capacity utilization in the corporate was below par as well, he said, and added that the damaged financial sector would result in credit growth being limited and investments not growing.
Roubini, however, did not rule out the chances of a double dip recession if private demand didn’t recover, the stimulus went away but oil prices continued to climb to USD 100 per barrel levels. “It's not my main scenario but there is a risk of that sort. The main scenario is one of anaemic recovery. I don't understand how this is going to be a rapid recovery to potential growth or above potential growth.”
US faces Catch-22
The US faced a dilemma over the direction of its fiscal and monetary policy, he said. “If you take away the monetary and fiscal stimulus away too soon, you end up like Japan 1998-2000 or the US in 1937-1939 — you have a double dip [into recession]. Taking the stimulus away right now when the private demand is still weak is a mistake,” he said. “If you maintain the stimulus, monetary and fiscal, and you have a runaway budget deficit and you've to keep monetising them, eventually that will lead to an unsustainable fiscal policy, increase in expected inflation and that could again crowd out recovery.”
The wall of liquidity chasing risk assets around the world was both good and bad, he said. “Some of it is good news because it leads to higher stock prices and some of it is dangerous as it leads to a sharp increase in all energy, food and commodity prices. There's going to be a negative shock on the commodity importing countries.”
Markets may correct
Stock markets around the world, which have run up heavily on hopes of a quick recovery, will have to correct if the flow of macro-economic news is not as good as expected, Roubini said.

My Commnets:
In a week we saw that two masters came out with entirely opposite view.....whom investor need to beleive.
Going by what I am writing , I am with Noureil Roubini and not with Marc Faber....


  1. Multi-year bull market ahead: Bolton Bernard Lo and Michael Patterson, Bloomberg

    HONG KONG/LONDON: Sustainable economic growth and low interest rates worldwide will spur a "multi-year" bull market in equities, led by developing nations, said Fidelity International's Anthony Bolton.

    "Low growth means low interest rates, and actually that's one of the best environments for stock-market investing," Bolton, president of investments at Fidelity International, which oversees about $141 billion, said in an interview on Bloomberg Television in Hong Kong.

    "Anything that can show growth in this low-growth environment is going to be bid up by investors. It's very pro the emerging-market world versus the developed world."

  2. Yes. Rajeev you are correct. In my opinion, Nouriel Roubini looks more logical and practical, while Marc Faber looks extremist. Hope we have atleast U/W shaped recovery in India.

  3. Doc,
    Whenever Marc Faber has come out to speak he has only spoken Dooms and nothing else.
    The owner of Gloom ,Boom and Dooms is in very fact is a Gloom and Doom predictor..........Lol....Never seen BOOM in his speaking even when market was down at 8500 in India and Dow at 8k.....

  4. Hi Rajeev:

    Just for your notice this guy has copied the content from your blog
    and put it up on forums as if he has done R&D , beware of copycats ;)



    ---------- Forwarded message ----------
    From: "parekh.vishesh" parekh.vish...@gmail.com
    Date: Oct 5, 3:36 am
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    To: AIII (Association of Indian Individual Investors)

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    M - 099090 11288