SOS What Rounini Said?

By Roubini in Nov 2009

On Oil

Roubini says the "recovery justifies oil going from $30 to "maybe $50". Since oil is today at $80, the remaining $30 are speculation, and speculators and herding behavior.However, there is a Finnish proverb: "Sh*t must be good. Millions of flies can't be wrong" (not Roubini who said that) , so oil can still go higher.However, $145 oil killed the economy last year. He is worried that oil is going to go over $100 for reasons that have nothing to do with the fundamentals of supply and demand. Oil at $100 right now will have the same effects on the economy as $145 in 2008. No matter what GS says.

USD Carry Trade and Commodities Bubble

Roubini believes there a huge bubble fueled by zero interest rates in the U.S. and in other countries which are causing a huge carry trade. The dollars are invested in risky assets such as commodities, equities, and credit. An even bigger bubble than before is being created."It’s going to go crashing down, in an ugly way." "I don’t know when the correction is going to occur, it could be a while longer, but eventually it will be a pretty ugly correction, across many different asset classes."

On Gold:

He does not believe in gold. He says there are two reasons gold can go up:1. Inflation, not the case now as are are in deflation (capacity glut, weak demand, big unemployment).2. Armageddon, or another depression. He thinks this has been avoided will all the massive printing."So all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense. Without inflation, or without a depression, there’s nowhere for gold to go".

MyView

Roubini, Soros, Prechter and Rogers...Oh my! They are singing the same tune. The risk of 4 of the intelligent experts said of the economy is wrong at the same time is almost zero. How can two renowned academicians, and two renowned investors reading the same pattern of US Dollar (in the short and medium term) be wrong at the same time?

What the majority (more than 80%) main media and analysts said:

Market will go up

USD will continue to decline

Gold will reach all time high

Commodities will continue to go up

OK, I have never knew or heard that majority will make money in the long run, but the fact is proven that one percent of the population own ninety percent of the world's wealth.

Would you choose to listen to the 4 fellas or the 12,000 fellas out there. Well, the majority may be right for the time being, but the 4 fellas are correct in the long run and makes lots of money.