AEI’s March 28, 2007 Subprime Seminar - IV
According to his speaker biography at the March 28th AEI event,[1] "Nouriel Roubini is a professor of economics at the New York University Leonard N. Stern School of Business, and cofounder and chairman of Roubini Global Economics LLC, a Web-based economic and geostrategic information service and economic consultancy." He can also be pretty well counted on to provide consistently bearish comments on the passing macro-economic scene. His Roubini Global Economics (RGE) Monitor site is a standby of Doom’s sidebar, and his analysis is well respected by MISH, Rich Toscano, Calculated Risk, and other name-brand bubble bloggers. Roubini certainly lived up to form in this instance. Check out these sound bytes!
- "… we are literally in a subprime economy …" [0:23:20]
- "… we’re nowhere near close to the bottom of the housing recession." [0:25:10]
- "[the YOY housing decline is] closer to ten percent, even if the official number is telling you otherwise." [0:26:06]
- "I would argue that about fifty percent if not more of all originational mortgages for the last couple of years would be things I would consider as reckless — as just toxic waste." [0:27:21]
- "They’re not tightening standards only for subprime. They’re doing it across the board." [0:28:15]
- "… regulators … were asleep at the wheel for six years, under the ideology they should not regulate markets …" [0:28:21]
- "if you’re going to have a significant interruption in the CDO market then the whole financing base for the residential MBS market … is going to essentially falter" [0:29:10]
- "… until you work out this glut .. of housing … we’re not going to see a recovery." [0:35:53]
At least prior to the 2006 mid-term election, right wing commentators like James K. Glassman and others sympathetic to the Bush Administration had been consistently bullish on the economy. This made Roubini a somewhat surprising choice for AEI’s seminar, and demonstrates a willingness among the neo-con’s banking analysts to entertain the idea that there may be serious trouble brewing in mortgage finance. Many of the points made here were covered in RGE Monitor blog posts from around the same time, but the present talk provides a good summary of Roubini’s thinking in late March. Doom is proud to present this annotated (and unauthorized) transcript of Nouriel Roubini’s twelve minute initial presentation at AEI.
