Economic `Armageddon' predicted

[Il_Mostro]

Boston globe (http://business.bostonherald.com/businessNews/view.bg?articleid=55356)
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Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.
But you should hear what he's saying in private.
Roach met select groups of fund managers downtown last week, including a group at Fidelity.
His prediction: America has no better than a 10 percent chance of avoiding economic ``armageddon.''

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The Economist (http://www.economist.com/agenda/displayStory.cfm?story_id=3421877)
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The dollar’s status as the world’s reserve currency—its preferred store of value, if you will—is gradually coming to an end. And, ironically, the fact that it has become so popular in recent years will only hasten its demise.

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Will we really sort this one out?

[Dynasty]

I'm curious about how many times "experts" have predicted economic armageddon over the past 60 years.

[wacki]

Why do they do that? You think that would destroy their credibility. And how many times have you seen them predict a 90% chance of economic armageddon?

[Il_Mostro]

I have no idea. But I do know that past performance is only a really reliable meter of past performance... And as far as I understand some of the "fundamentals" are looking bleak today, things like:
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To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash. Every working day.
That is an amazing 80 percent of the entire world's net savings.
Sustainable? Hardly.

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Twenty years ago the total debt of U.S. households was equal to half the size of the economy.
Today the figure is 85 percent.

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From the Boston Globe article.

I've read many articles saying things like this lately, comparing to previous crashes and showing that today things look like they did just before them. Not a proof we will have a meltdown, but at least cause for concern

[goldcowboy]

Roach is probably one of those economists who have predicted ten of the last two depressions

[Il_Mostro]

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Roach is probably one of those economists who have predicted ten of the last two depressions

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Do you have any references to this, or are you just failing to be funny?

[The once and future king]

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And how many times have you seen them predict a 90% chance of economic armageddon?



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None that I can recall. Slowdowns sure, but not armeggedon.

[jakethebake]

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None that I can recall. Slowdowns sure, but not armeggedon.

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There have been a bunch of them. Even whole books written about it. I don't know that most have used the word "Armageddon" but they've been equally as hyperbolic.

[The once and future king]

Please give an an example.

[jakethebake]

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Roach is probably one of those economists who have predicted ten of the last two depressions

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Do you have any references to this, or are you just failing to be funny?

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He's right. I don't have the dates. But Roach is one of those that is constantly predicting meltdowns years before they occur and then saying, "See? I told you so."

[jakethebake]

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Why do they do that? You think that would destroy their credibility.

[/ QUOTE ] Credibility is why they do it. they only have to be right once and their reputation is made..at least for awhile.

[Il_Mostro]

[ QUOTE ]
He's right. I don't have the dates. But Roach is one of those that is constantly predicting meltdowns years before they occur and then saying, "See? I told you so."

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I'm not sure how to read that. Does he predict meltdowns years before they happen, or does he predict meltdowns left-right-and center and are right every now and then?
I'm seriously interested.

[jakethebake]

[ QUOTE ]
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He's right. I don't have the dates. But Roach is one of those that is constantly predicting meltdowns years before they occur and then saying, "See? I told you so."

[/ QUOTE ]

I'm not sure how to read that. Does he predict meltdowns years before they happen, or does he predict meltdowns left-right-and center and are right every now and then?
I'm seriously interested.

[/ QUOTE ] Eventually there will be a recession. There will be one bigger than the recent one, which was actually very tame. If he predicts one now, and keeps predicting it, eventually he'll be right. It may take 10 years, but eventually he'll be right.

[jakethebake]

[ QUOTE ]
Please give an an example.

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Example 1 (http://www.amazon.com/exec/obidos/tg/detail/-/0671885286/qid=1101305315/sr=1-10/ref=sr_1_10/102-6044825-1961766?v=glance&s=books)

Example 2 (http://www.amazon.com/exec/obidos/tg/detail/-/0385512236/qid=1101305315/sr=1-3/ref=sr_1_3/102-6044825-1961766?v=glance&s=books)

Example 3 (http://www.amazon.com/exec/obidos/tg/detail/-/0471979546/qid=1101305514/sr=1-8/ref=sr_1_8/102-6044825-1961766?v=glance&s=books)

Example 4 (http://www.amazon.com/exec/obidos/tg/detail/-/159196153X/ref=pd_sim_b_1/102-6044825-1961766?%5Fencoding=UTF8&v=glance)

I found these in like 2 minutes on Amazon. These are not really good examples. Just all the time I was willing to invest.

[The once and future king]

The first three seem valid in there predictions/subject matter.

1: There was a depression in the 90s.

2: The dollar has collapsed

3: There is a bear market.

We cant talk about 4 because it predicts a depression in the future. I thought you were going to provide examples of predictions by economists of depressions in the past when there was in fact no consequant depression.

Also as I have said I have seen predicitons of depressions before but not armeggedons.

[jakethebake]

[ QUOTE ]
The first three seem valid in there predictions/subject matter.

1: There was a depression in the 90s.

2: The dollar has collapsed

3: There is a bear market.

We cant talk about 4 because it predicts a depression in the future. I thought you were going to provide examples of predictions by economists of depressions in the past when there was in fact no consequant depression.

Also as I have said I have seen predicitons of depressions before but not armeggedons.

[/ QUOTE ]
Look at when some of them were written. The point wasn't whether they were right or not, but the extremism of the predictions and simply that these self-annointed gurus are always out there making extreme predictions.

[jakethebake]

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Also as I have said I have seen predicitons of depressions before but not armeggedons.

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I don't know what your definition of these is. I know Roach personally, and I'm sure he doesn't mean "Armageddon" literally. He's talking about a harsh and sustained recession. Pick the Wall Street Journal or Financial Times. At least once a week you'll read about some economist making some kind of extreme prediction like this. At the other end of the spectrum are one like "Dow 36,000". He'll probably be right...someday.

[The once and future king]

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Look at when some of them were written.

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LOL.

Example 2 (Collapse of the Dollar) is coming out in Dec 2004, after the phenomenon it predicts has allready happened.

The dollar is collapsing and is widely predicted to continue to do so by the vast majority of the economic community.

[MtSmalls]

Mr. Roach and the Boston Globe article are both looking at issues that are unsustainable and problematic in the least. Like everything in International Economics, there are a lot of variables, a ton of theories and no real science.

The falling value of the dollar can be seen as a good thing, in that it makes the US exports less expensive. However, the US exports are largely soft, that is intellectual property (movies, technology) and food, so this isn't the advantage that it used to be.

Its also a very bad thing, in that interest rates will be forced up. Not by the Fed, but by the markets as the REAL return of the bonds issued by the Treasury must keep up with the rest of the world.

Additionally a large problem is WHERE the bonds that are currently issued are held. I can't remember the exact percentage, but I read recently that CHINA holds a huge percentage of the outstanding US Debt. Should they decide for political or economic reasons to pare back their percentage of the debt or dump it all together, the markets here are going to be in for a huge shock.

[busguy]

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Will we really sort this one out?

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Ah . . . not in the next four years you won't, unless your government starts focusing less attention on other's economies (Iraq) and more on your own.

/images/graemlins/frown.gif busguy

[Il_Mostro]

You realize I'm from Sweden, right? /images/graemlins/smile.gif

I meant a more general "we", since most of the world has a stake in the US dollar, if it falls, so does the rest of us, like a house of cards.

[Il_Mostro]

[ QUOTE ]
Eventually there will be a recession. There will be one bigger than the recent one, which was actually very tame. If he predicts one now, and keeps predicting it, eventually he'll be right. It may take 10 years, but eventually he'll be right.

[/ QUOTE ]

Obviously I agree with that. But I also believe there is a distinct risk that we are facing a complete meltdown of the world economy. And if oil production peaks too soon, I'm sure we are.

[busguy]

Nope,

Didn't see that but I think that you get (and probably share) my point.

/images/graemlins/blush.gif busguy

[cardcounter0]

I frequently do business in Romania.

The US Dollar was always King. The local currency, the Lin, trades at about 1,000,000 to $33. (A month or two ago, it was 1,000,000 to $30, the dollar just doesn't go as far as it used too). Nobody wants the local currency.

In the past year, there is a definite preference from the Romanians to be paid in Euros. They want Euros instead of Dollars. Can't blame 'em, but the currency conversion is killing me.

[goldcowboy]

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Obviously I agree with that. But I also believe there is a distinct risk that we are facing a complete meltdown of the world economy. And if oil production peaks too soon, I'm sure we are.

[/ QUOTE ]

Let me guess... You were one of the Y2K hysterics weren't you?

[Il_Mostro]

[ QUOTE ]
Let me guess... You were one of the Y2K hysterics weren't you?

[/ QUOTE ]

Nope. Have you even looked at the problem? Have you anything to offer but random ad hominem attacks?

[ACPlayer]

Here is an article on the dollar from Asia Times (http://http://www.atimes.com/atimes/Global_Economy/FK25Dj03.html)

I am not crazy about the analogy of the US infrastructure to the Twin Towers infrastructure (a more seemly analogy could have been found perhaps) but the analogy has merit.

[Il_Mostro]

You really need to learn how to post links /images/graemlins/cool.gif

[ACPlayer]

Asia times article. (http://www.atimes.com/atimes/Global_Economy/FK25Dj03.html)

I was using Netscape at the internet cafe yesterday and it appends a paste to http:// rather than replaces when using the URL button below. Back to using IE now.