Here is Housing Doom’s third installment of our unauthorized annotated transcript of the American Enterprise Institute’s October 30, 2008 seminar "The Deflating Mortgage and Housing Bubble, Part IV: Where Is the Bottom?"  This is the presentation by Nouriel Roubini.
- "… there’s a growing recognition that this was not just a subprime mortgage problem …"
- "… this is other huge time bomb of the CDS market where about $55 trillion of nominal protection has been sold against an outstanding stock of only $6 trillion of corporate bonds. "
- "… the $1 trillion number at this point is not the ceiling, it’s just barely a floor …"
- "… currently financial markets are dysfunctional. Fundamentals don’t matter, valuations don’t matter, it’s just flow."
- "… And even a small tiny island like Iceland can have systemic effects on asset prices, let alone if you have a blowup of Hungary, or Argentina, or Korea, or other economies."
Nouriel Roubini: [23:34] Well, Desmond called it very well, I think many aspects of why things are getting worse rather than better in the housing market, and I share his outlook and pessimism. I would like to elaborate on the broader picture about what’s happening in the economy and the financial markets.
I’ve been saying for a while this will be the worst financial crisis the US has experienced since the Great Depression and it looks like the worst one. I mean I don’t think there’s anything that’s happened since the Great Depression looks so severe. Of course the real economic consequences in terms of output contraction are not going to be as bad as the Great Depression because there is a massive amount of policy action, but in terms of financial shock, I mean what does happen in the last few months is really quite unbelievable, every other week another major financial institution going belly up.