This is a nation of shopped-out and debt-burdened consumers who just lost their ability to keep over spending. They lost their resilience and started to give up on spending in the third quarter of 2008. This was when for the first time in two decades, personal consumption contracted. With personal consumption making up for over two-thirds of aggregate demand for the U.S. economy, the outlook for the U.S. is not good for 2009. Consumers are still at the center of the dynamics that will play out in the real economy in 2009.
Professor Roubini told CNBC in a live interview:
"Growth is going to be close to zero and unemployment rate well above 10 percent into next year."
Professor Roubini also said he sees:
"There is no hope for the recession ending in 2009 and will more than likely last into 2010."
Last he again pushed the idea of bank nationalization of at least the four major banks:
"Most of the U.S. financial institutions are entirely insolvent."
"The market friendly view for the banks is nationalization."
"Temporarily take over the banks, clean them up and get them working again."
According to Professor Roubini, unfortunately, Tim Geithner's Financial Stability plan won't solve our financial woes because it assumes that the system is solvent, while nationalization is the only option that would permit us to solve the problem of toxic assets in an orderly fashion and allow lending finally to resume.