Roubini: Bear Market Only Half Over, But It's Not Armageddon
Posted Jul 22, 2008 11:40am EDT by Aaron Task in Investing, Newsmakers, Recession, Banking
Related: ^DJI, ^SPX, ^IXIC, SPY, DIA, XLF
http://finance.yahoo.com/tech-ticker...Not-Armageddon
One of the most noted skeptics on Wall Street, NYU Professor Nouriel Roubini says the financial system is in "the worst crisis since the Great Depression," and that the bear market in stocks is only half over.
Subprime mortgages are only the tip of the bad-loan iceberg, says Roubini, who expects the "subprime financial system" to ultimately suffer credit-related losses of between $1 trillion and $2 trillion vs. the approximately $330 billion thus far.
Roubini believes the economy slid into recession in the first quarter of 2008 and will remain there until the second quarter of 2009, with "subpar growth" likely to characterize the recovery.
That's the (very) bad news.
The good news is Roubini, who also chairs research firm RGE Monitor, is "not in the Armageddon camp."
The economist sees a "severe recession" that will last 12-to-18 months, but does not foresee the U.S. sliding into a prolonged Japan-like economic malaise. Similarly, while further 20% declines for major averages isn't pretty, it won't be as bad as the bursting of the tech bubble or the Great Depression for stocks, which Roubini sees starting to recover later this year/early next year.