The Very Connected Nouriel Roubini...

...thumbs just how globally connected he is:

I am in Moscow attending and speaking at the Troika Dialogue's Russia Forum

Remember, Roubini had Larry Summers on his payroll, was an adviser to Timothy Geithner at one time and spent time recently in China with top officials there.

Roubini: India Has Edge On China

The future global growth will come largely from emerging economies from Asia to Latin America,said Nouriel Roubini from a conference in India, adding that India and China together had a higher potential than the rest of the world.

“China has been a hare and India a tortoise but growth is accelerating in India,” Roubini said. “There is a massive need for both human and physical capital.”

Roubini Warns On U.S./China ‘Collision Course’

Fresh from a meeting with Premier Wen Jiabao at the annual China Development Forum, Nouriel Roubini has put out a note to his clients.

The U.S. and China are on a “collision course” over the value of the Chinese currency and investors are underestimating the disruptions for global financial markets, according to  Roubini.


“The risk of a collision course on China’s currency peg and a wider trade rift between the world’s largest debtor and creditor nations has risen significantly in recent months,” Roubini wrote in a note to clients. “Markets do not seem to be pricing in the potential consequences of the U.S. labeling China a currency manipulator, which could be significant even if both sides avoid taking immediate bilateral actions.”


There is a 50 percent chance (whatever a 50% chance means) that the U.S. government will label China a currency manipulator, said Roubini.

That the U.S. continues to harass China for propping up the dollar is quite astounding. Do U.S. officials really want to see what will happen to the dollar and the ability of the Treasury to sell debt overseas, if China stops supporting the dollar.

China's propping up of the dollar is, of course, based on wrong-headed mercantilist thinking that exports are superior to imports. Such thinking by the Chinese government, and the resulting follow-through actions, lowers the standard of living for the average Chinese resident, but is a boost to the standard of living of the average American, who experiences lower prices than would otherwise be the case.

Any "success" the U.S. achieves in getting China to stop propping up the dollar puts the U.S. in danger of much stromger inflation and an inability of the Treasury to raise  money anywhere near the current low rates. Rather than berating China, U.S. officials should do everything they can to keep China's policy in place.

This Is Connected

Nouriel Roubini reports he is attending a meeting with Chinese Premier Wen.

Not to mention that in the U.S., he is close to Larry Summers, Timothy Geithner and Ben Bernanke. In fact, Summers was on his payroll.

Major Expansion at Roubini Global Economics

It pays to be the Doctor of Doom.

Nouriel Roubini's firm, Roubini Global Economics, announced today that it has made major appointments to its Market Research and Strategy Team.

Gina Sanchez has joined the firm as a Director, Equity and Asset Allocation Strategy, Natalia Gurushina has joined as Director, Emerging Markets Strategy and Arun Motianey has been hired as Director, Fixed Income Strategy. These three senior strategists are based in the United States. Jennifer Kapila has joined as Financial Institutions Analyst, based in London, in the United Kingdom. All will work closely with Arnab Das, Managing Director of Market Research and Strategy based in London and New York.

Before coming to RGE, Gina Sanchez spent four years as an institutional asset manager, serving at the California Endowment, a $3 billion Los Angeles based foundation, as Managing Director of Public Investments and at the Ford Foundation, a $10 billion New York based foundation, as Director of Public Investments. In addition, Sanchez was a portfolio manager and strategist for eight years at American Century Investment Management in Mountain View, CA. In 2009, Sanchez received the Institutional Investor Rising Stars of Foundations and Endowments award. She received her A.B. in economics from Harvard University and an MS in international economic policy from Stanford University.

Prior to joining RGE, Natalia Gurushina worked for Pantera Capital Management, a global macro hedge fund, where she developed investment strategies for both emerging and developed European markets. Prior to that, Natalia was in charge of macroeconomic research for select economies in Europe, the Middle East, Africa and Russia at Deutsche Bank and Bankers Trust. Before joining the private sector, Natalia analyzed economic and political developments in Russia and the former Soviet Union for the Open Society Institute in Prague. Natalia has a Ph.D. in economic history from the University of Oxford, Christ Church, and a bachelor's degree in economics from Moscow State University.

Arun Motianey joins RGE as Senior Fixed Income Strategist after twenty years at Citi. His last position was in that firm's Global Wealth Management division where he was managing director and head of macro research and strategy and a voting member of its Global Investment Committee as well as its Asset-Liability Committee. He did his Ph.D. research in the University of Cambridge's Joint Program in Mathematics and Economics, including a year as a Graduate Fellow at Princeton University. Arun is also the author of SuperCycles: The New Economic Force Transforming Global Markets and Investment Strategy (McGraw-Hill).

Jennifer Kapila comes to RGE after several years as a European banks analyst at Dresdner Kleinwort in London. She holds a joint master's degree from the University College of London and the School of Oriental and African Studies, and a bachelor's degree in business administration from the University of Texas at Austin with a concentration in Latin American studies.

Insiders at the Asian Financial Forum

The Asian Financial Forum, a two day event, begins tomorrow in Hong Kong.

As would be expected, the list of confirmed speakers are mostly Asian, including Norman T L Chan,CEO of the Hong Kong Monetary Authority and many Asian finance ministers. But, of particular note, are the very few non-Asian confirmed speakers.

They include:

Gerald Corrigan, the former president of the New York Fed (pre-Geithner) and current (surprise) managing director at Goldman Sachs.

Richard Sandor, Chairman and founder, of the Chicago Climate Exchange. The CCE trades all six greenhouse gasses. If you want to identify one man who is going to benefit the most from global warming regulations, this is the man. I saw him last at the 2007 Michael Milken Conference. He was on a panel with Milken that was attended by about 30 of us. The comment I recall most clearly from the panel discussion was made by Sandor: "In Chicago we say, if you are not at the table, you are on the menu."

Nouriel Roubini. Roubini really gets around. In many ways, I think he is probably one of the most connected guys globally. He's clearly connected in the states with Geithner, Summers (He had Summers on his payroll) and Bernanke. But he also seems to be pretty tight in China. And, it is not unusual for him to pop up in Europe.

Who Is Nouriel Roubini Hanging Out with This Week?

The man who can claim the pre-White House Larry Summers as an advisor and silent partner, Nouriel Roubini, is on the shores of Lake Como in Italy.

He spoke there at the Ambrosetti Workshop. According to Ambrose Evans-Pritchard, the Workshop is "a sort of Davos/Bliderberg for food-loving policy elites....at the Villa D’Este (an ultra-posh hotel on the lake)"

Roubini said that the best we can hope for is a long-hard slog for two or three years, with a rising risk of a double dip into “W-shaped” recession. I'm really not entirely sure how Roubini reaches his conclusions (I think he is a data dog), but it is right in line with the thinking here at EPJ.

Was Roubini Tipped Off to the Bernanke Re-Nomination?

I think so.

And I should have picked up on it, but missed it.

As I have pointed out in the past, Larry Summers and Nouriel Roubini are tight. In fact, the White House confirmed to me that Summers owned stock in Roubini's firm, RGE Monitor. It was given to Summers for advisory work he had done for Roubini.

It appears that Summers leaks to Roubini. Roubini, for example, appears to have had details on how the stress tests were being conducted, details that were not public. Summers was Roubini's most likely source on this. Thus, I could not get my mind around Roubini's endorsement a couple of week's back of Bernanke to be re-nominated as Fed chairman. Why would Roubini go out and publicly damage his compadre Summers, who was considered to be very desirous of the Fed position?

In retrospect, the answer was obvious. When Roubini made his endorsement of Bernanke, the decision had already been made at the White House. Roubini wasn't pushing for a re-nomination of Bernanke, he was getting in front of a story that was already in the bag.

Summers let Roubini know that the decision had been made to keep Bernanke at the Fed and that the announcement would be made sometime in the near future. Ultimately, the announcement was made, for whatever reason, in a rushed fashion when Obama was on vacation.

Lesson to be learned here: Forget Roubini's forecasts, pay attention to his comments on White House policy. He has the inside track on that.

Top White House Advisor Owned Stock in "Dr. Doom's" Advisory Firm

EPJ Exclusive:

The top Obama economic advisor of President Obama, Larry Summers, held a stock position in the economic advisory firm of Nouriel Roubini, Roubini Global Economics, which he sold before joining the White House. Summer's spokesman, Matt Vogel, confirmed to me that Summers did hold the stock position and that he did not pay for it but received the stock as compensation for advisory work he provided to RGE.

Roubini is known on Wall Street as "Dr. Doom" for his generally pessimistic view of the economy.

Roubini appears to have strong access to the Administration. Back in May, I pointed out that he appeared to have unusually detailed information about how the rankings would work for the stress tests results which were not yet public.

Front Running Tips From the President

It pays to pay close attention to what the President says, it can mean money in your pocket. John Crudele explains:

President Obama tipped the world off to the Friday [jobs] number well ahead of time.

Speaking Thursday night at a campaign rally in Tysons Corner, Va., Obama pleaded his case that we've turned the corner economically -- despite a record number of people on food stamps and no slowdown in home foreclosures -- with these words: "I'm convinced that actions we've taken in the first six months have helped stop our economic freefall. . . . We're losing jobs at half the rate we were at the beginning of the year."

But the president appears to have helped people who weren't in that crowd break the laws against insider trading.

The White House and the Treasury Department get the jobs report one hour after the financial markets close on Thursday. But the rules are that these numbers are confidential, and they are supposed to stay secret for a reason.

Since investors are trying to make a profit by trading securities at any time somewhere in the world, having knowledge of this very important economic statistic could be used for vast personal profit.

The 247,000 jobs that were later reported to have disappeared in July were, indeed, less than half the number being lost earlier this year -- at least in the official Labor Department tally. But job losses during June were 467,000, which was more than half the amount lost earlier in the year.

So the president had to be referring to the new (and supposedly secret)July report and not the one for June.

There's money to be made by paying close attention to comments from the president and other top officials. Also, pay close attention to any last minute forecast changes from Nouriel Roubini and, naturally, Goldman Sachs.

Roubini and Reality

Nouriel Roubini is out with an op-ed at NYT calling for the reappointment of Ben Bernanke as Fed chairman. Here's his pitch:

LAST week Ben Bernanke appeared before Congress, setting off a discussion over whether the president should reappoint him as chairman of the Federal Reserve when his term ends next January. Mr. Bernanke deserves to be reappointed. Both the conventional and unconventional decisions made by this scholar of the Great Depression prevented the Great Recession of 2008-2009 from turning into the Great Depression 2.0.

Mr. Bernanke understands that in the Great Depression, the collapse of the money supply and the lack of monetary stimulus during contractions worsened the country’s economic free fall. This lesson has paid off. Mr. Bernanke’s decision to keep interest rates low and encourage lending has, for now, averted the L-shaped near depression that seemed highly likely after the financial collapse last fall.

Say what?

First this week's testimony by Bernanke did not set off a discussion about his his reappointment. It been going on for months. See here and here.

Roubini then writes:

Mr. Bernanke understands that in the Great Depression, the collapse of the money supply and the lack of monetary stimulus during contractions worsened the country’s economic free fall. This lesson has paid off.

As things got worse in early 2008, Bernanke collapsed money growth that summer. See here, here, here, here, here, here, here and here. This is what intensified the downside in September 2008.

And Bernanke is doing the same thing this summer. See here.

Most bizarre, Roubini writes:

Mr. Bernanke’s decision to keep interest rates low and encourage lending has, for now, averted the L-shaped near depression that seemed highly likely after the financial collapse last fall.

Yet, just last week, Roubini stated we are likely headed down again in a double dip recession. Here's Bloomberg:

A “perfect storm” of fiscal deficits, rising bond yields, “soaring” oil prices, weak profits and a stagnant labor market could “blow the recovering world economy back into a double-dip recession,” he wrote in a research note today. “It is getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented.”

Roubini Sees Risk of ‘Double Dip’ Global Recession

The global economy may fall back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth, said NYU economics professor Nouriel Roubini, according to Bloomberg.

A“perfect storm” of fiscal deficits, rising bond yields, “soaring” oil prices, weak profits and a stagnant labor market could “blow the recovering world economy back into a double-dip recession,” he wrote in a research note today.

Roubini is correct about the double dip, but he is mostly wrong about the reasons.

Rising government debt is a problem. It will sop up money in the economy and crowd out much needed funds for the private sector. Soaring oil prices are generally a symptom of rising inflation. I don't see any major inflation in the short term, if anything the oil price will probably decline on the second dip. A stagnant labor market has little to do with causing a recession, it is a symptom of recessions, except for the unemployment added on by legislation such as higher minimum wage laws.

Double dip recession? Yes.

Roubini's explanation for why it will occur? Not really.

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.

More Signs the Economy Is Turning (and that Jeff Macke Has Crashed)

You won't think so when you see the beginning of this clip, after the Dennis Kneale intro, and at end of this clip, but sandwiched between Jeff Macke's, ah, comments(?) are some further indications that the economy is on the upturn.

As for Macke, it's clear he is reading much too much Nouriel Roubini and Joe Weisenthal (and probably paying too much attention to Treasury Secretary Geithner comments).

The must see video is here.

I think Macke is saying that just weeks ago the prevailing thinking was that Bank America and the autos were poorly managed, and now CNBC treats the CEOs of these companies as though they have something insightful to say. Of course, this nuttiness is only compounded by the stuff coming out of the Treasury.

It's surprising we haven't all cracked.

But, let the record show that Macke is the first, but certainly not the last, that has crashed because of this madness.

Nouriel Roubini: Designated Doom and Gloomer?

When Lila Rajiva suspects someone is an insider, pay attention. She identified Nouriel Roubini as the "designated doom and gloomer” back in February.

More and more the picture that is emerging of Roubini is that of a major insider. Writes The New Republic: He has a

...swelling portfolio of clients--the World Bank, IMF, 50 central banks,and 30-odd finance ministries among them.

and

he hasn't attacked the Obama administration's policies with Paul Krugman's fury.

Could any of this be because the President's top adviser, Larry Summers was a silent partner in Roubini's consulting firm, RGE Monitor?

And TNR adds this new tidbit that I haven't seen anywhere before:

...he served briefly at the World Bank and the IMF, before deciding to abandon academia for a while and adopt the life of a bureaucrat at the White House and Treasury (where he was Timothy Geithner's adviser)

How Does Nouriel Roubini Know This?

In an op-ed in today's FT, Nouriel Roubini and Matthew Richardson write:

The tests, which measure how viable banks are under adverse economic conditions, have no “failed” category...

How do they know this?

I have been following the bank stress test story very closely and I have not seen any mention that there is no failed category. Perhaps I missed it. I don't think so.

I just completed a google search for:

"no failed category" bank stress tests

The only link that comes up is the Richardson-Roubini commentary. Could our man with the infamous wall be getting inside information from his former silent partner?

The Grey Lady Looking Into Roubini

NYT is doing some heavy research on Nouriel Roubini. Can a hit piece be far behind?

How will the Grey Lady handle this Roubini factoid (Warning: Bizarre, vulgar, triple x)?

The Roubini Ratio Failure

As I have repeatedly stated econometric modeling is voodoo economics.

Nouriel Roubini is really trying to prove my point in a most embarrassing way. In a single comment for New York Magazine, he name drops Bill Clinton, reveals his latest econometric formula and proves he has no idea how to attract quality women:

So, what makes his parties so great? we asked.

"Fun people and beautiful girls," Roubini said, grinning. "I look for ten girls to one guy." His friend Bill Clinton, he added, is a fan of this ratio.

Of course, his ratio formula is as out of whack as most of his other formulas? Beautiful women? Huh. In the last six months,I have perhaps seen a dozen pics in the media of Roubini surrounded by women. I would classify all as dogs. And, since when does Bill Clinton no anything about hot woman? Remember this is a guy who married Hillary and then as president had an affair with pudge ball Monica Lewiinsky. Not an inspring track record.

Now, John McCain, on the other hand, has a formula. It may not involve any regression analysis, but it works. It is rumored he had an affair with Amy Lumet.

Dr. Connected Stays Gloomy, Gets More Connected

Nouriel Roubini, who counted President Obama's top economic advisor, Larry Summers, as a silent partner in his forecasting firm, remains bearish on the economy. Re the outlook for the U. S. economy, in an interview with the WaPo, he said:

Next year, I believe that the growth rate is going to be low -- 0.5 percent for the U.S., compared to the consensus view of [plus] 2 percent. I believe the unemployment rate this year is going to go well above 10 percent and will be well above 11 percent next year, so even if we are technically out of a recession, we are going to feel like we are in a recession.

He also now sits on the Congressional Budget Office's Panel of Economic Advisers.

Dr. Doom Tells It the Way He Sees It

One thing you have to say about Nourel Roubini, he tells it the way he sees it. At RGE Monitor, where it appears President Obama's chief economic adviser, Larry Summers, appears to have been a silent partner, Roubini lays it on the line:

As I have argued over and over again I am not a perma-bear and will be the first to call for a sustained economic recovery and recovery of the financial markets when I see one. And while now the real economy is not any more in the L-shaped free fall in which it was in Q4 of 2008 and Q1 of 2009 (second derivatives are turning positive) we are still in the middle of a severe U-shaped recession that will last much longer than what expected by the current consensus that sees positive growth by Q3 of this year and growth close to potential (2% plus) next year. We at RGE (our 200 page Global Economic Outlook will be out in two weeks) instead see the US recession lasting until at least Q4 of this year (still -1.5% growth by Q4) and the positive growth next year being so low (0.5%) and the unemployment rate rising to 10% by the summer of this year and peaking well above 11% next year that it will feel like a recession even in 2010 even if we are technically out of it some time next year. The latest awful numbers on retail sales, job losses, initial claims, PPI deflation and business inventories are dashing the delusions of the optimists that there is light at the end of the tunnel already by Q3 of 2009. We don't see any meaningful evidence that the economy will bottom out before 2010.

I'm not quite sure how Roubini reaches these conclusions.I have always viewed him as some kind of trend trackerer. As far as policy prescriptions, he seems to be some kind of Keynesian socialist. He's for big spending and the nationalization of banks.

He used to be a pretty good data hound so I am surprised by his continued negativity. Given his Twitter reports about his recent travels, maybe he hasn't had time to study the numbers in detail since his new fame and worldwide demand. Or, maybe, his former silent partner has silently tipped him off about one of the banks in the stress report. But for now, I have to give the award for best Keynesian data hound to Paul Krugman.