Be Afraid Now: Highly Respected Economist and Forbes Columnist, Nouriel Roubini, Says Our Financial System “Is Now In Cardiac Arrest”

If you’re wondering why the stock market continued to plunge on Friday, despite the bailout being passed and signed by the president, it may be because the financial system has already passed a threshold, and is now in systemic collapse. Nouriel Roubini on Friday:

It is now clear that the US financial system—and now even the system of financing of the corporate sector—is now in cardiac arrest and at a risk of a systemic financial meltdown. I don’t use these words lightly but at this point we have reached the final 12th step of my February paper on “The Risk of a Systemic Financial Meltdown: 12 Steps to a Financial Disaster” (Step 9 or the collapse of the major broker dealers has already widely occurred).

Yesterday Thursday a senior market practitioner in a major financial institution wrote to me the following:

Situation Report: So far as I can tell by working the telephones this morning:

  • LIBOR bid only, no offer.
  • Commercial paper market shut down, little trading and no issuance.
  • Corporations have no access to long or short term credit markets — hence they face massive rollover problems.
  • Brokers are increasingly not dealing with each other.
  • Even the inter-bank market is ceasing up.

This cannot continue for more than a few days. This is the economic equivalent to cardiac arrest. 

About Santi Tafarella

I teach writing and literature at Antelope Valley College in California.
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