What's the worst-case scenario for stocks?
Economist Nouriel Roubini thinks 2013 will be a lousy year, even if the fiscal cliff gets taken care of. But things could actually get worse. Here's how.
He's hardly been optimistic since the financial crisis. He thinks 2013 will be trying for the global economy. Europe will be struggling with recession. China's economy is still soft, and he thinks U.S. economic growth will be modest at best.
But a perfect storm of four issues could make 2013 truly awful, Roubini said on an interview on Turkish television. Here they are:
The U.S. fiscal cliff issue doesn't get resolved. That means tax rates go up and government spending gets cut. The result, many economists believe, Roubini among them, will be another recession. We should note that President Obama and House and Senate leaders met Friday and swore they'd get the problem fixed. That was enough to turn a bad day for stocks into a winner.
The European recession gets nasty. This would occur if Greece runs out of cash (a real possibility) and leaves the euro currency in a messy way. Read that as this: Greece basically defaults on its debt and plunges global credit markets into chaos.
China's economy tanks. It's possible. Real estate in many Chinese markets has been overbuilt, and construction spending has slowed. The Shanghai Composite Index, the benchmark Chinese stock index, is down 34% since April 2011 and 67% since peaking in November 2007. Hong Kong's Hang Seng Index, however, suggests things aren't that bad. The index is up 15% this year.
War erupts in the Middle East. This assumes Israel and Iran somehow go to war, not a huge possibility by itself. But the rising tensions between Israel and Syria and Israel and Egypt over what Israeli forces might do in the Gaza Strip could cause major disruptions in crude oil markets, with crude oil pushing toward $200 a barrel with serious effects on the global economy.
So far, however, oil markets aren't in a panic mode.
Crude oil (-CL) for January delivery in New York settled up $1.05 to $86.92 a barrel Friday and was up 1% on the week. Brent crude, the better indicator to watch in this case, was up 97 cents to $108.98 a barrel and is down slightly for the week.
Wholesale gasoline futures for December delivery ended the day up 1.39 cents to $2.7101 a gallon.
AAA's national average retail price of gasoline was $3.43 a gallon Friday, down slightly from Thursday and down 9.4% this quarter.
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pretty much 2013 is the end year for western economies.
Look the middle east is going to explode next year if not this year. Israel is going to use the Gaza situation to get rid of Syria's leadership but Syria's leader is not going down without a fight and will use his chemical weapons on Israel as the Israelis will try to first strike his chemical weapons.
This wil cause Israel to launch at Iran and then all the oil fields are sit ablaze by Iran and end of 50 percent of the oil supply to the world.
Japan has already collasped into a deep depression and taking China with it as neither side wants to play with the other anymore.
Europe well there is not enough money in the world to keep Europe going so it's going to fall apart it is already there people just do not knwo it yet.
The US well we collapsed in 2008 and took the world with us and now we are going down again. Basically we need a $2 trillion fix to the economy a year and the budget deal even if successful will only be a $100 million fix to the eoncomy a year. Pretty much 1 to two years is all the US has left for it's economy.
Add in another huge crop failure world wide and the Israelis going nuclear in the middle east as the Arab nations no longer under the control of dictators keeping their people under wraps go after Israel in a big way.
Pretty much the western banking system will not come out of the coming crisis intact.
"Stocks are a bubble. We will crash"
V_L, blah blah blah...If you fools gave me a penny stock everytime you spewed that, I would be a Billionaire.
The Party of Yes (dems) will borrow and print to stay in power. People will eventually tire of being Democrat Supporting Slaves for a handout. They will join Conservatives who believe in jobs and prosperity.
Egghead, It has been proven time and time again that Commieville doesn't work for the middleclass.
You are the perfect example of a Socialist Loser....you hate Banks, Markets, Corporations, Conservative Values and all things that are pro-economic growth.....you love big govt. which leads me to think you are one of the freeriders or a commie loser.
VL - talking financial pointers - LOL
What you're going to tell everyone how to beg?
A pimp for Obuma = LOSER on the dole. ANY successful person would NEVER vote for the darkie in an empty chair , unless
a) You're a darkie too (It's NOT racist thought to vote for a darkie simply because YOU'RE a darkie ! )
b) a beggar on the dole
c) died in the wool commie.
Now, he's giving financial advice ?
LOL--- the fool can't rub 2 nickels together but he's got opinions!
"Stocks are a bubble! Enjoy the view from the top. Crash is going to dwarf Great Depression. An entire world cannot borrow non-stop and then hope that all will be fine when the pay back time arrives. The financial system as you know it will end soon with bang."
Stocks are a bubble. We will crash. Borrowing isn't the problem, banks as lenders is the problem. We grow when lending is done correctly, we fail whenever banks dominate. It won't end in a bang. We will fall and stall. A small cluster of Inflationists will get caught and executed for world crimes. The rest of us will climb out or fall in, it's the way natural selection works. READING ASSIGNMENT: 1905. Banks had lent to Pawn Brokers making them Loan Sharks. Loan sharking compromised the average worker and family. 4 out of 5 of us were so overindebted that America came to a halt. Take the time to know what happened so history doesn't repeat itself. Hint: the good people created the Small Loan Act. The bad people falsely passed the Federal Reserve Act a few years later. Are we not seeing that same group today in the Party of NO? You read... you tell me.
The worst case scenerio for stocks? They all fall to 0. It will not happen. There are cascading effects if the Fed limitlessly prints money to purchase its' own debt.
I do not see any reason to think that stocks will take off, but they won't drop to 0. I would start loading up on Medical stocks.
Maybe we could get the Feds to talk to Texas about how they can run their Government within its budget. They might learn a thing or two. But, D.C. can't find its own a** with both hands.
Love to hear all of you whiners!!! We survived (barely) 8 years of George Bush, Obama has been a breeze compared to that GOP disaster!
I've seen on this post that Republican's are called TAKER's
A summarized timeline of Barack Obama's job history:
Student, Occidental College/Columbia University, 1979-1983,Business International Corporation, 1983, New York Public Interest Research Group, 1984, Community Organizer, Developing Communities Project (Chicago), 1985-1988, Student, Harvard Law School, 1988-1991, Editor, Harvard Law Review, 1988-1989, President, Harvard Law Review, 1990-1991, Summer Intern, Sidley & Austin law firm, 1989, Summer Intern, Hopkins & Sutter law firm, 1990, Illinois Project Vote, 1992, Lecturer - Consitutional Law, Chicago Law School, 1992-2004, Davis, Miner, Barnhill & Galland law firm, 1993-2004, Illinois Senator, 13th District, 1996-2004, U.S. Senator, Illinois, 2005-Present. Source:
I do not see any job where he produced ANYTHING!!
The Tea Party gets a chuckle with Liberals giving the GOP advice lately...they want to help ....alrighty then...yuk yuk.
If the GOP is stupid enough to believe they need to lean left, then they will be finished....they lost the 2012 Election because they did flip flop near the end with talk of reaching across the isle which means giving the Liberals what they want. It cost them the needed Conservative Votes that would have carried them to victory.
The Tea Party and Conservatives will concentrate on the 2014 mid-terms.
The Republican Party best get their azzes as far right as possible or we will replace them.
The GOP needs to realize, minorities, illegals, beggars, freeriders, lefties, liberals, commies and the progressive dems will never vote Republican.....so get over it and go to your base just like the Dems did.
This guy is no genius he is just stating the obvious, any investor would know that one or all four could influence the market but its a matter of what sustains, and its a matter of other economic conditions coming into playl.
This isnt anything that any smart investor isnt already aware of . Quit wasting my time with these so called "experts"
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All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.
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