July 31, 2008, 6:00 am

I Hope that You Have Lived a Good Life Because the End is Near…

by: The Financial Blogger    Category: Investment, Market and Risk,Personal Finance
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Ok, here’s what you need to do now: go outside your house, jump in your car and go to the grocery store nearby. Then, go at the first cashier and help any old woman with 10 bags or more to pack them in her car. If you have to, help her to cross the street and walk her home. In your way back, try to see if there is any cat stuck in a three or a kid missing his lollypop. Do as many good actions as you can because the end is near!

 

world end

We are about to die from our own greed! This is what I would tell you if I would believe what is being said in the economic world sometimes.


The latest news came from a well known economist: Mr. Nouriel Roubini, economics teacher at the Stern School of Business / New York University. He claims that the United States are about to crash into their most important recession since the Montreal Canadiens won the Stanley Cup… I mean since 1929!

This is quite a statement, even for a reputable economist such as Mr. Roubini. He based his thoughts on the following facts:

– Several small banks will declare bankruptcy due to the subprime crisis. They are actually the financial institutions that are the most vulnerable, holding near 67% of all “b class” mortgages. It seems that a few regional and national banks are in the same basket.

– The Federal Deposit Insurance Corporation (FDIC) already disbursed 10% of its fund in the Indy Mac story a few weeks ago. This is only the first time of a series of actions to save financials from catastrophe.

– Regardless how many cheques they will receive from the Government, US consumers can’t buy anything any more since they are maxed out on all their credit facilities. If people stop buying, it will only leads to a bigger economic depression.

Mr. Roubini also states that the US stock market should go down 40% from its 2007 high. Therefore, we are only half way done. According to his estimations, the recession should last 12 to 18 months instead of 6 months which was previously forecasted.

When we look at his arguments, I can’t really say that Mr. Roubini is wrong. In addition to that, he definitely has more experience than me in the market 😉 However, he would not be the first one to make false prediction. Is so different this time than any other crisis we encountered in the market? I honestly don’t know but I must say that human beings tend to be euphoric or panicked for not much.

Therefore, I only wish I had the time to go back and read editorials from brilliant economist during 9-1-1 or the techno bubble. I guess they were writing the same thing 😉

image source: flickr.com

 

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Comments

[…] Financial Blogger says, “We are about to die from our own greed” in I Hope You Have Lived a Good Life Because The End Is Near… You’ll have to read the story to find out […]

I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you down the road!