We had Nouriel Roubini on TechTicker on Friday. Even he underestimated the magnitude of this debacle.
But Berkshire Hathaway’s Warren Buffett disagrees: The economy “will be in shambles throughout 2009 and…probably well beyond,” the Oracle of Omaha declared this weekend.
In sum, Buffett and much of the rest of humanity are just now coming around to Nouriel Robuini’s way of thinking, the economist known as “Dr. Doom” is upping the ante on his longstanding bearish views.
A year ago Roubini was forecasting an 18-month recession with a U-shaped recovery; now, he’s now expecting the downturn to last at least 24 months and possibly 36-months. He also sees rising risks of a Japanese-style L-shaped stagnation, i.e. a prolonged period with little or no economic growth.
“I was one of most bearish people [but] the economy has surprised the bears on the downside,” says Roubini of NYU’s Stern School and RGE Monitor. “What’s happening in the world now is scary.”
Indeed, while the U.S. economy contracted 6.2% in the fourth-quarter, Roubini’s main concern is economic activity in much of the rest of the world is in much worse shape. And while he is often critical of U.S. policymakers – including over the stimulus package, Fed policy and bank bailouts – Roubini says “the rest of the world is way behind the curve,” in terms of doing the “right things” to confront the worst economic crisis since the 1930s.