Yesterday morning (Thursday, July 16), I tuned into CNBC with my usual jaded eyes and ears and was amply rewarded by the total misrepresentation of Nouriel Roubini’s comments on the economy.
The talking heads were almost giddy as the “news” flashed across the bottom of the screen almost non-stop:
“Roubini says the worst is if over for the financial (sector) and the economy.”(sic)
The talking heads opined that the gains in the market were because of this comment.
Something didn’t sound right, not right at all. I had just seen a video of a Bloomberg panel featuring Roubin and Robert Shiller (who forecasts the housing market, among other things). The panel discussion was on July 9. Here’s the story with the video which is up at Roubini’s RGE Monitor site,under the title “Roubini Says U.S. Recession Will Last Six More Months.” Roubini also said that whatever recovery occurs will be “shallow.” And, he added more grim analysis of the economy and our present state of affairs as the discussion progressed.
So, now it seems that Roubini has issued a statement to counter the reporting of his views:
Published: Thursday, 16 Jul 2009 | 5:51 PM ET
Nouriel Roubini, the economist whose dire forecasts earned him the nickname “Doctor Doom,” said after markets closed Thursday that earlier reports claiming he sees an end to the recession this year were “taken out of context.”
“It has been widely reported today that I have stated that the recession will be over ‘this year’ and that I have ‘improved’ my economic outlook,” Roubini said in a prepared statement. “Despite those reports … my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.”
Several business news outlets, picking up on a report initially from Reuters, earlier Thursday cited Roubini as saying that the worst of the economic financial crisis may be over.
Yeah, “several business news outlets” means YOU, CNBC!
Roubini’s unfiltered statement is up now at his site.
Nouriel Roubini | Jul 16, 2009
“It has been widely reported today that I have stated that the recession will be over ‘this year’ and that I have ‘improved’ my economic outlook. Despite those reports – however – my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.
“I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19months into that recession. If, as I predicted, the recession is over by year end, it will have lasted 24 months with a recovery only beginning in 2010. Simply put I am not forecasting economic growth before year’s end.
“Indeed, last year I argued that this will be a long and deep and protracted U-shaped recession that would last 24 months. Meanwhile, the consensus argued that this would be a short and shallow V-shaped 8 months long recession (like those in 1990-91 and 2001). That debate is over today as we are in the 19th month of a severe recession; so the V is out the window and we are in a deep U-shaped recession. If that recession were to be over by year end – as I have consistently predicted – it would have lasted 24 months and thus been three times longer than the previous two and five times deeper – in terms of cumulative GDP contraction – than the previous two. So, there is nothing new in my remarks today about the recession being over at the end of this year.
And then he gets to the real core issue:
“Also, as I fleshed out in detail in recent remarks the labor market is still very weak. I predict a peak unemployment rate of close to 11% in 2010. Such a large unemployment rate will have negative effects on labor income and consumption growth; will postpone the bottoming out of the housing sector; will lead to larger defaults and losses on bank loans (residential and commercial mortgages, credit cards, auto loans, leveraged loans); will increase the size of the budget deficit (even before any additional stimulus is implemented); and will increase protectionist pressures.
“So, yes there is light at the end of the tunnel for the US and the global economy. But as I have consistently argued, the recession will continue through the end of the year, and the recovery will be weak and at risk of a double-dip, as the challenge of getting right the timing and size of the exit strategy for monetary and fiscal policy easing will be daunting.
That sounds a whole lot less open and shut than the message being broadcast by CNBC, doesn’t it?
Filed under: Current Politics Tagged: | Bloomberg News, budget deficit, CNBC, double-dip recession, financial news, global economy, mainstream media, Nouriel Roubini, RGE Monitor, Robert Shiller, the economy, the recovery, U.S. economy