Roubini: Suckers and Fools

Roubini stays negative. Those betting on the Dow hitting 6,500 might be right:

Roubini: The emerging consensus among economists is that growth next year will be close to the trend rate of 2.5 per cent.
Investors are talking of 'green shoots' of recovery and of positive 'second derivatives of economic activity' (continuing economic contraction is the first, negative, derivative, but the slower rate suggests that the bottom is near).
As a result, stock markets have started to rally in the US and around the world. Markets seem to believe that there is light at the end of the tunnel for the economy and for the battered profits of corporations and financial firms.
This consensus optimism is, I believe, not supported by the facts. Indeed, I expect that while the rate of US contraction will slow from -6 per cent in the last two quarters, US growth will still be negative (around -1.5 to -2 per cent) in the second half of the year (compared to the bullish consensus of +2 per cent).
Moreover, growth next year will be so weak (0.5 to 1 per cent, as opposed to the consensus of 2 per cent or more) and unemployment so high (above 10 per cent) that it will still feel like a recession.

Toxix Assets and Winston Wolf

Update III: Geithner seeks new powers over financial companies

Update II: The President and the Treasury Department unveil the plan to get credit flowing to working families again by bringing stability to the financial system.

Update: Frank Rich Warns of a ‘Katrina Moment’

Treasury Secretary Timothy Geithner and the rest of Obama's recovery team need to demonstrably channel Winston "I-Solve-Problems" Wolf, the fast-acting, hyper-efficient fix-it man from Pulp Fiction (1994, Quentin Tarantino).

News from today' Times (Toxic Asset Plan Foresees Big Subsidies for Investors) is spot-on in this needed Wolfian aspect of Obama's recovery plan.

From Edmund L. Andrews, Eric Dash and Graham Bowley.:

Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks. The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.

Long-awaited is right. We believe Obama is on this, we understand the repercussions, so thank you for bringing in the cleaners now.

"You're sending the Wolf? Shit, negro, that's all you had to say."
- Jules (Samuel L. Jackson)

As for congressional Republicans and any Democrats who resist soaking up this trillion-dollar toxic pool, as the Wolf said: "I'm here to help. ... So pretty please, with sugar on top, clean the *&%$ (mess)."