Monday, June 22, 2009

Roubini Significant Correction Coming

Dr. Doom is at it again.

Nouriel Roubini perhaps while contemplating the artwork on the walls of his loft, now sees a "W" formation for the economy.

"I see even the risk of a double-dip, W-shaped recession… towards the end of next year," Roubini told CNBC's "Squawk Box Europe."

Roubini bases his forecast on the price of oil heading higher:

Oil could be closer to $100 a barrel towards the end of this year, this could be a negative shock to the economy...That's why I believe there's going to be a significant market correction for equities, for commodities and even for credit,"

Roubini may be correct about a double-dip recession, but it could come a lot sooner than next year, and it won't be the result of higher oil prices, but the result of a slowing money supply, which Ben Bernanke has put into crash dive mode again.

Money supply growth under the Bernanke regime has been terribly erratic, thus, it is possible he could resume printing again, but as of right now he will crash the economy again, if he continues to keep the brakes on money supply growth.


  1. Mr. Wenzel,
    I understand the FED can control only the monetary base but could you explain to me how exactly the FED controls M1 and M2? No doubt movements in the monetary base impact M1 and M2 but isn't that impact non-linear and market driven?

    Thanks for your time.

  2. The Fed has a very good booklet that explains most of it:

    Bernanke is adding new "tools" all the time, but it would take much more than a comment, more like a book, to explain it all.