Jan 30 2012
Roubini at Davos!
Roubini at Davos!
Nouriel Roubini, the globe-trotting New York University Economics Professor who gained wide acclaim by predicting the economic events that transpired in 2008, continues to be in the economic predictions business. Friday in Davos, speaking in one of the final sessions of this year’s World Economic Forum, he is reported as having made the following specific predictions:
- Eurozone countries (I doubt he was including Germany) “and not just Greece – are insolvent”. My comment: I don’t think there is much news in that;
- Greece will leave the Eurozone this year, and Portugal would leave the Eurozone after this year. My comment: I don’t know whether or not either will leave the Eurozone. I think the bigger question is whether or not Greece with default or ‘de facto’ default on its debt, and that question will be answered long before the end of 2012;
- there is a 50% chance the Eurozone will break up in the next 3 to 5 years. My comment: I don’t have an opinion that, other than having just spent Friday in London in part talking about that very thing, I would say that the senior UK businessmen I talked with believe it is not in Germany’s interest for the Eurozone to break up;
- if the U.S. and Iran go to war, oil prices would increase by 50% and there will be a global recession. My comment: Roubini may be correct in this. I have doubts as to whether the U.S. will go to war against Iran, as I think the U.S. Government likely shares that view and likely believes that a significant increase in oil prices would have a very negative effect on what I think to be a fragile U.S. economy. That said, Leon Panetta, the current U.S. Secretary of Defense said on 60 minutes last evening that the U.S. would not tolerate Iran’s development of a ‘deliverable nuclear weapon’, so for that and other reasons I clearly could be proven wrong;
- there is a recession in the UK, the U.S. “is not doing great”, India is in slowdown, and there will be significant slowdown in China in 2012. My comment: antidotally, from conversations with the people I spoke with in London on Thursday and Friday things are looking quite bleak there economically. I don’t have an informed opinion on slowdowns in India and in China other than the 2012 GDP growth rates in both those countries are forecast to decline from those of 2011.
Roubini proved to be correct in his forecasts prior to 2008. The question has to be: Was that a ‘one swallow does not a summer make’ moment? It seems to me one at least needs to think hard about what Roubini says, and not dismiss it out of hand.
See ‘Eurozone will collapse this year, says Nouriel Roubini’ published by The (UK) Telegraph on January 28 – reading time 1 minute.
Commodities – The Next Decade?
In a recent article written by Frank Holmes, CEO and chief investment officer of US Global Investors, there is a very interesting Periodic Table of commodity returns which shows the annual returns for 14 major commodities including coal, copper, crude oil, gold, nickel, silver, and zinc. If you are not familiar with that table I suggest you visit this article and download …..continue reading.
Commentary reading time 3 minutes. Referenced article(s) reading time 5 minutes.
George Soros On Europe and Riots!
George Soros, the well-known successful investor (right up there with Warren Buffet) can – at least in my view – hardly be expected to rant about things he doesn’t believe. A recent article reports Soros is now expressing the views:
- that “at times like these, …..continue reading.
Commentary reading time 3 minutes, thinking time much longer. Referenced article(s) reading time 5 minutes.
Iran To Be Paid In Gold?
A January 24 article has reported that India may have agree to pay Iran in physical gold for its oil – and that China may follow suit. The article says that these moves, if made, will be made to circumvent US sanctions that target countries who trade with Iran. The article also reports that Iran and India are negotiating backup alternatives with …..continue reading.
Commentary reading time 4 minutes. Referenced article(s) reading time 13 minutes.
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- The Baltic Dry Index!
- Ray Dalio – October 20, 2011 Interview!
