Roubini as Not Keynes

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Feb 162010

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Just another Roubini warning. And just more disbelief (or cheerleading a recovery) by CNBC. It is embarrassing listening to CNBC trying to get Roubini to adhere to their opimistic line.

Roubini is a Keynesian economist who “got things right.” He is flamboyant and self-promoting. While I am not one of his big fans, his past observations have turned out to be mostly correct. I also find little in this interview to disagree with.

Interestingly, he used none of his Keynesian theory or tools to forecast outcomes and earn his reputation. His approach, rather than being tied to Keynesianism, is more eclectic, a form of entrepreneurial forecasting. His focus on debt and trade imbalances and government deficits has served him well. Keynes might not approve, but I do.

Whether his amazing prognosticating run can be encapsulated under any theoretical umbrella is doubtful. Whether it can be continued, may even be more doubtful. Regardless, he has been the one with the hot hand, so far.

Roubini: The Recovery as a House of Cards

This video really highlights how far out of consensus I must be.

It’s been a while since we posted any Nouriel Roubini content here and, as I sat listening to the video below, all I could think was, “that makes sense,” “I’m with you on that point” and “bingo!” Then I hear the clucking from the CNBC hosts – guest or otherwise – about how these theories simply cannot be true. Theories that seem so obvious to me.

They contend that Nouriel is ignoring the evidence of recovery all around us. I feel like taking the little video player and shaking it… hello CNBC hosts, COST-BENEFIT analysis! Do you realize you are celebrating bounces off of multi-decade lows? Bounces that cost a few trillion dollars worth of stimulus/handouts/morphine to engineer? And yet they are still extremely limp? We are citing 33.4 hour work weeks as recovery when all-time lows are 33.2 hours? Is the logic just that “you need to start somewhere?”

Gosh, I can only imagine the outright cries of joy when the census workers …. [To Continue Reading]