Politics - News Analysis
Economist Who Predicted 2008 Financial Crisis Says Stock Market Will Plummet 40%
The end of a very rough week for U.S. markets brought a worrying prediction, from an economist who knows bear markets.
While one expert warned fallout from the global coronavirus outbreak could be “worse than the financial crisis” of 2008, the economist who correctly predicted that very crisis is now saying the idea of a major global recession “doesn’t sound too farfetched.”
Nouriel Roubini, a New York University business professor and market prognosticator who foretold the housing bubble burst, told Yahoo Finance on Friday to expect “severe” consequences as the coronavirus continues to rattle markets. How severe? He told Der Spiegel it could be worse than investors even believe at this point, predicting “global equities to tank by 30 to 40 percent this year.”
He said people “prefer to believe in miracles,” (not necessarily referencing President Donald Trump’s prediction the coronavirus will “disappear … like a miracle,”) and don’t realize the “simple math” tells us that realistically, a squeezed Chinese economy will mean downturns around the globe. “This crisis will spill over and result in a disaster,” said Roubini.
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Roubini, who is often nicknamed Dr. Doom for his frequent pessimistic predictions, also saw doom and gloom for Trump’s future as president as a result of any economic strife. Asked by Der Spiegel, Roubini said Trump would likely try to benefit politically from the outbreak, but “will lose the election, that’s for sure.” Pointing to past incumbent presidents getting ousted amid geopolitical tensions that damaged the economy, he said “The Democratic field is poor, but Trump is dead. Quote me on that!”
Star Economist Roubini on the Economic Effects of Coronavirus: "This Crisis Will Spill Over and Result in a Disaster". The stock markets will plunge by 30 to 40 % because of the coronavirus. And that Trump will lose his re-election bid. https://t.co/UIFXSr8pqK via @derspiegel
— Nouriel Roubini (@Nouriel) February 28, 2020
Though the week just saw a 3,500-point drop for the Dow Jones Industrial Average, Roubini warned: “It is far from being over.”
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