Wednesday, October 08, 2008
The world's most accurate economic forecaster (if not its most popular economist) is now predicting a recession of at least two years.
This interview at Yahoo! Finance contains a few more observations of just what is happening today in both the economy and in financial markets, providing little hope of any improvement anytime soon.
Nouriel believes the recession began in the first quarter of this year and will stretch into early 2010 - at least.
When asked if he had perhaps become too bearish recently and whether there's a possibility that he'll "miss the turn", the following response came:
I worry that things will actually get worse than I expect rather than the alternative. Look what's happened to the stock market for the last few days, the inter-bank market, credit spreads, the financial system is even worse than I predicted a few months ago.The interviewer chuckled briefly and said, "All right, thanks very much."
I knew there was a systemic financial risk but the speed at which things have been unraveling has been worse than I expected. I don't think right now that any miracle is going to change things.
It's going to be ugly and if we manage it right, we're probably going to have a recession that is severe but not terrible. We'll have a financial crisis that is manageable, but, at this point, I don't think there is much reason to be optimistic I'm afraid.