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Roubini, Taleb: Another Year of Recession

February 19, 2009 – Comments (2)

Nouriel Roubini and Nassim Taleb, financial crisis experts credited with predicting the housing crash and ensuring bank collapses, now say they expect the recession to last 12 more months.

Roubini, chairman of consultancy RGEMonitor, said it will be a minimum of 12 months because there is currently a “fundamental” crisis.” For now, he, says, “cash is king.”

By 2010 we might see a mild recovery, but the current recession could instead prove to be three times as long and as deep as the previous two, he said during a joint interview on CNBC.

“If you don’t do everything right, and I think there’s a large probability that’s going to happen, then we may end up in a multi-year stagnation or near depression like the one that Japan had,” he added.

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[The more this is discussed, the more inevitable it seems.]

Federal Chairman Ben Bernanke says the recently debated idea of nationalizing troubled U.S. banks — if necessary — would be short-lived.

“As a general rule, it’s very challenging for governments to manage banks for a protracted period,” Bernanke said Wednedsay at the National Press Club.

“There is the additional problem if you have a government-run institution, you tend to lose their franchise value, and counterparties don’t like to deal with you because they don’t know your future.

“Whatever action would need to be taken at one point or another, there’s a very strong commitment on the part of the administration to keep banks private and return them to private hands as quickly as possible.”

Former Fed Chairman and longtime free-market icon Alan Greenspan said earlier this week that nationalization of U.S. banks might be the “least bad” way forward in the ongoing financial system collapse.

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