Roubini: 6 Million US Job Losses in 2009

[RedEarth]

Jan. 27 (Bloomberg) -- Global stock market declines are increasingly correlated and emerging economies will follow developed nations into a “severe recession,” according to New York University Professor Nouriel Roubini.

Roubini said economic growth in China will slow to less than 5 percent and the U.S. will lose 6 million jobs. The American economy will expand 1 percent at most in 2010 as private spending falls and unemployment climbs to at least 9 percent, he added.

“There is nowhere to hide,” Roubini, an economics professor at NYU’s Stern School of Business who predicted the financial crisis, said from Zurich in an interview with Bloomberg Television. “We have for the first time in decades a global synchronized recession. Markets have become perfectly correlated and economies are also becoming perfectly correlated. This is not your kind of traditional minor recession.”

Roubini said the U.S. government should nationalize the biggest banks because losses will exceed assets, threatening to push them into bankruptcy. The banks could be privatized again in two or three years, Roubini said. The professor reiterated his prediction that U.S. financial losses will more than triple to $3.6 trillion and that global equities will fall 20 percent this year from current levels.

‘Zombie Banks’

“Nobody’s in favor of long-term ownership of the U.S. banking system by the government, but if you don’t do it this way, you end up like Japan where you kept alive for a decade zombie banks that were never restructured,” he said. “That’s going to be much worse. It’s better to clean it up, nationalize it and sell it to the private sector.”

Japanese policy makers hesitated in addressing a banking crisis in the 1990s and then struggled to revive growth and fight deflation in what is known as the “Lost Decade.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aryXdRCs.Tow&refer=home

video......

http://www.ritholtz.com/blog/2009/01/roubini-6-million-job-losses-in-2009/

[Warpy]

1. I think he's being optimistic

Shiny new strip malls near me are showing empty storefronts. Old strip malls are just empty. The retail sector is getting hammered, and that's the job pool of last resort, labor intensive businesses that employ one hell of a lot of people.

This is only January. By March, it's going to be grisly.

[panAmerican]

2. I believed Roubini even before he was popular.

This is why I think that the rush to use up the rest of the TARP money is ill-advised, and will only make things worse. This is something I simply cannot support.

[Rydz777]

5. You're right. The first half of the TARP has disappeared

somewhere in the ether. We can't keep throwing out money blindly without fueling inflation, and inflation is the cruelest tax on the poor.

[4_TN_TITANS]

3. Off to the Greatest...

Until people start listening to the ones who got it right, we're just playing with a box of band-aids.

However, I feel that if the public has to nationalize the banks and bail them out, someone needs some jail time for saddling the public with bad debts.

[readmoreoften]

4. I don't get why the tax payer should pay for CEOs mistakes, make no profit, then give them back.

Huh? The tax payers (i.e. workers) pay for the banks, 'nationalize them' through a big capitalist bailout-palooza, allow the corporate to keep the profit, and then "re-privatize" them--which means what? Give them back to the banksters to run into the ground again?

If we nationalize our banks, maybe we should elect officials to run them and have the profits go into rebuilding infrastructure. I suppose that takes out the whole 'global' aspect. Perhaps working class people should elect their bank CEOs around the world. Really, what do these parasites really do for us?