Is Another Lehman Effect on the Horizon

10.21.22 - Is Another Lehman Effect on the Horizon?

Gold last traded at $1,657 an ounce. Silver at $19.42 an ounce.

EDITOR'S NOTE: Leading stock market indices ended the week on a high note; but is this reflective of the true health of our markets? Are markets immune to all of the pitfalls we are hearing so much about these days? The threats of inflation, defaults, canceled production orders, etc ... and that's only the short list. Economist Nouriel Roubini believes not only are corrections coming, but they are going to be some of the worst we've seen.

'Dr Doom' Nouriel Roubini says to brace for a crash that combines the worst of the financial crisis and 1970s-style stagflation - Business Insider

• Markets should brace for a period of decline that echoes crashes of the 1970s and 2008, according to Nouriel Roubini.
• He predicted that central banks will "wimp out" from fighting inflation, fueling a financial crisis.
• "It's going to get ugly, the recession, and you'll have a financial crisis," Roubini told Bloomberg and the 1970s, Nouriel Roubini has warned.

The "Dr Doom" economist said Wednesday that he expects red-hot inflation to lead to a recession - before major cracks start to appear in financial markets.

"It's going to get ugly, the recession, and you'll have a financial crisis," he told Bloomberg's Odd Lots podcast.

Roubini sees supply-side shocks including the coronavirus pandemic and the war in Ukraine as drivers of global stagflation, which refers to a combination of soaring prices and sluggish growth.

That would echo the economic pain of the 1970s, when efforts to tame high inflation plunged the US into a deep recession.

"Inflation is not going to fall fast enough because you have the negative supply shock," Roubini said.

"Remember when you have negative supply shock, you get a recession and high inflation," he added. "We're not going to get a fall in inflation that's rapid enough to go to 2%."

But Roubini also compared the current outlook to the 2008 crisis.