Roubini: Those Are Yellow Weeds, Not Green Shoots

11 June 2009  Wall Street Journal

# First, employment is still falling sharply in the U.S. and other economies. This will be bad news for consumption and the size of bank losses.

# Second, this is a crisis of solvency, not just liquidity, but true deleveraging has not really started, because private losses and debts of households, financial institutions, and even corporations are not being reduced, but rather socialized and put on government balance sheets. Lack of deleveraging will limit the ability of banks to lend, households to spend, and firms to invest.

# Third, in countries running current-account deficits, consumers need to cut spending and save much more for many years. Shopped out, savings-less, and debt-burdened consumers have been hit by a wealth shock (falling home prices and stock markets), rising debt-service ratios, and falling incomes and employment.

# Fourth, the financial system — despite the policy backstop — is severely damaged. So the credit crunch will not ease quickly.

# Fifth.....

http://blogs.wsj.com/economics/2009/06/09/roubini-those-are-yellow-weeds-not-green-shoots/