America’s economy facing "mother of all meltdowns"

[zengrifter]

America’s economy risks mother of all meltdowns

Martin Wolf - 2/25/08

IN HIS memoir, The Age of Turbulence, former US Federal Reserve governor Alan Greenspan wrote: “I would tell audiences that we were facing not a bubble but a froth — lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.”

That used to be Greenspan’s view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this , we should ask a true bear. My favourite is Nouriel Roubini of New York University’s Stern School of Business.

Recently, Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006. Then , his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”. Here are his 12 steps to financial disaster.

Step one is the worst housing recession in US history. House prices will, he says, fall by 20%-30% from their peak, which would wipe out between $4000bn and $6000bn in household wealth.

MORE- http://www.businessday.co.za/article...?ID=BD4A713391