Dr. Doom in Financial Times

Nouriel Roubini, an economics professor at NYU, has had the nickname “Dr. Doom” for a few years now.  He was early and accurate in his prediction of the economic crisis we are currently in.  Dismissed as an alarmist, he has emerged as a superstar in the past 6 months.  I have to admit that when I started reading his work a couple of years ago his views were so far outside the mainstream that I did not give him much credit.

Here is a link to a video interview he gave last week to the Financial Times.

True to form, he is calling for continued global “stagdeflation”, a combination of economic stagnation combined with deflation.  The short term looks ugly with continued downside risk.  This condition will continue throughout 2009 and into 2010.

The good news is that the end of the recession may come in 2010 and we are most likely not in a Japan Scenario.  In others words, we have 1-2 more years of difficulty in front of us, not 10+.  I hope he is right, but it does not change my investing outlook for now.  1-2  more years of “stagdeflation” can continue to wreak havoc on portfolios that are not appropriately invested.

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