Nouriel Roubini’s predictions: true or false?

October 15, 2012 2:48 pm3 comments
Nouriel Roubini

Nouriel Roubini

The Great Recession is probably the best thing that has ever happened to famous economist Nouriel Roubini, given the fact that he has predicted in details the 2006 collapse of the global financial system. Things for him have been quite good but concerning his forecasting record, maybe not so much.

Even before he shot to fame with his prediction, he had transformed his website into a research firm which later adopted the name of “RGE Monitor”, a collection of views and news on economy for subscribers only. The old RGE URL redirects you to roubini.com, where his face greets every visitor.

Now that face is the eight-figure business linchpin. Roubini said that he started his team with only 5 people in 2005 and up till now he has almost a hundred. He and his co-workers started in New York and now they have an office in New Delhi and London too.

Appearing on Oliver Stone’s Wall Street: Money Never Sleeps,  Roubini said that the Fed should make more purchases of securities. He is also of the opinion that the whole situation could have turned into a new Great Recession if they had not have adopted such aggressive fiscal and monetary easing.

In 2009, “Dr. Doom” made a forecast that the economy of the US would collapse in the second half of the year and it would only manage to grow only 0.5 to 1% in 2010.  Despite his prediction, the economy succeeded in expanding itself through all 6 quarters with an average annual rate of 2.5%.

A few months later, Roubini said that the rate of unemployment would hit 10% in 2010 and it did hit it 3 years ago but it has lower ever since.

Roubini is also the financial prophet of the “perfect storm” in 2009 which was brought about by rising taxes and oil prices, and government yield bonds. This didn’t happen but Roubini warned everyone that another one was coming the next year and that time because of the fiscal cliff of America, China’s overheated economy and the crisis in the eurozone.

In 2009 the price of gold dropped 1,200 dollars an ounce and Roubini was of the opinion that it looked like a bubble. Last year’s gold was trading for 1,700 dollars, then it peaked around 1,900 dollars and Roubini is still of the opinion that gold is a risky bet.

“Dr.Doom” thinks that the USA relies too much on foreign finance concerning the private-sector investment and the government spending. The imbalances and capital flows and trade have narrowed but Roubini is still not convinced that the situation is not risky.

Nouriel Roubini shares that he enjoys his work and he thinks that his job is very interesting especially when it comes to such macroeconomic situations.

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Dylan Shems

Dylan Shems is Financial and World News Writer and Equity Analyst for HedgeJournals.com, owned and operated by HedgeJournals.com. He obtained his Master of Arts in Journalism in Read more...

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