Roubini says it is going to get uglier...

currently in Greenwich, Connecticut: We may not be through the current crisis, according to most keynote speakers at the Global Alpha Forum held this week in Greenwich, Connecticut. Before taking a look at these latest doomsday views, let's step back for a moment and applaud two nonconformists who already in 2007 had the brains and the courage to point to the problems which are still unfolding.

Hedge fund manager David Einhorn and economist Nouriel Roubini saw it coming...and Opalesque relayed their message to you...on time: On December 5th 2007, Opalesque reported that David Einhorn, founder of Greenlight Capital, presented his pessimistic analysis on Lehman Brothers at the Value Investing Congress the week before.

According to this Source, Einhorn explained at that conference that FAS 159 underpins his short thesis on Lehman. He went on to show that he believes the majority of Lehman’s earnings in 2007 have been derived from credit spreads widening and the effects of FAS 159. One perverse aspect of this is that as your company’s credit deteriorates, compensation bonus pools tied to earnings become fatter and you are essentially incented to report these fictitious earnings.

In his piece "The Rising Risk of a Systemic Financial Meltdown: The Twelve Steps to Financial Disaster", originally published on Feb. 5th 2008 (and carried on Opalesque a week later), Nouriel Roubini took an even more battering view.

More then five weeks before the Bear Stearns debacle, Roubini predicted - as Step 9 of the meltdown - that "one or two large and systemically important broker dealers" will "go belly up" and that other members of the "shadow financial system" - i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk - will also go bankrupt....

Source:
Roubini says it is going to get uglier...

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