Roubini Sees Market Crash All Over the World

October 30, 2009 by goldguru

New York University Professor Nouriel Roubini, who recently saw the recovery as “U-shaped,” is now concerned a dollar rebound will cause global markets to crash.

His main concern is the carry trade in the US dollar. The dollar is being borrowed at near-zero interest rates to then be invested into a wide array of now-popular assets including gold, commodities, equities, credit, and emerging markets. There are simply more dollars available in the system that are chasing the same types of things.

The risk is that the source of capital gain in these asset classes is simply due to the falling dollar, and is little more than a type of inflation. Because of this when the dollar strengthens he says, “you could have a market crash all over the world.”

More of Roubini’s latest words appear in Newsmax coverage of global markets crashing.

Roubini Sees Market Crash All Over the World originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a “uniquely refreshing” perspective on the global economy, investing, and today’s markets.