Roubini On The Failure To Predict Financial Crises

A very insightful video from the Perimeter Institute in which Nouriel lectures on his interpretation of the lack of vision of bubble participants, as well as the implicit bubble-creation facilitation by regulators and economists.

Definitely worth watching.

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Roubini Adjusts His S&P Target To 600

In a slightly less pessimistic statement today, Nouriel "Dr. Doom" Roubini said an S&P level of 500 "is less likely, but there is some possibility you get there" and put his S&P target at 600. Roubini's target is based on an S&P 2009 earnings of $50 and a 12x multiple. "My main scenario is that it is highly likely it goes to 600 or below" Roubini said in an interview at the CBOE Risk Management Conference in Dana Point (which one presumes did not have any Citigroup employees present).

“Even if you do everything right with fiscal and monetary policy, we’re still going to be in a recession through the end of this year and into next year,” Roubini said earlier during his speech at the options-industry conference. “The recession train left the station over a year ago, and it’s going to continue.”

Assuming Roubini's 12x earnings multiple is appropriate for the economy, one may be tempted to use Goldman Sachs' top down 2009 estimate of $40 and end up with a 2009 S&P target of 480, although if the market does drop to that point it is safe to say all bets are off.

Roubini's full CNBC interview below.

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Roubini Says Government-Backed Bank "May Crack"

As the Dow drops below the so called November test, Hogan's bottom etc., Nouriel is stoking the fire:

"The process of socializing the private losses from this crisis has already moved many of the liabilities of the private sector onto the books of the sovereign,” Roubini wrote on his Web site today. “At some point a sovereign bank may crack, in which case the ability of the governments to credibly commit to act as a backstop for the financial system -- including deposit guarantees -- could come unglued."

The one man systemic wrecking crew also sees a 30% chance of an L-shaped near depression without appropriate and aggressive policy action by the U.S. and major foreign economies.

"The global economy is now literally in free fall as the contraction of consumption, capital spending, residential investment, production employment, exports and imports is accelerating rather than decelerating,” Roubini said.

The protracted downturn Roubini warned of can only be prevented by “a strong, aggressive, coherent and credible combination of monetary easing (traditional and unorthodox),fiscal stimulus, proper clean-up of the financial system and reduction of the debt burden of insolvent private agents(households and non-financial companies),” he said.

Lovely. Sphere: Related Content

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Death Watch: Banking System

Or at least according to Nouriel Roubini. The NYU professor and longtime pessimist fired the latest shot across the bow of the financial house of cards. His claim: financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is "effectively insolvent."

"The problems of Citi, Banc of America and others suggest the system is bankrupt. In Europe it's the same thing." He also thinks that oil will trade between $30 and $40 a barrel throughout 2009.

We love this guy.

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