NYU Professor Nouriel Roubini, predictor of the financial crisis and more importantly, owner of vagina-y wall decorations, said that there could be another economic disaster if US housing prices drop again and prime mortgage defaults increase.
In a conference in Cape Town yesterday, Professor Roubini said that housing rates in the US could drop to 1% this year, causing “anemic” economic growth for the States, as well as other advanced economies. Japan is apparently totally screwed, according to Roubini, as it’s just “an accident waiting to happen,” because “the economy has not done the structural reform needed, even after 15 years of near depression, and politically there is a total stalemate.”
Emerging markets will be better off though, Roubini said. Although China is under pressure to appreciate its currency, Roubini says that they won’t allow the yuan to appreciate by more than 4% or 5% a year.
So how much can we rely on Dr. Doom’s depressing predictions anyway? Insider Monkey created a Roubini Sentiment meter, and found that “the correlation coefficient between the Roubini Sentiment Indicator and the S&P 500 Index had been -0.51 during that whole time. The correlation coefficient was 0.68 during the past 4 years. So, the Roubini Sentiment Indicator’s predictive power has weakened but is still at a significant level.”
Basically, we are probably fucked.