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Dr. Doom(Dr. Nouriel Roubini)–The Prophet of Economic Disaster was right!

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What do Nouriel Roubini a/k/a “Dr. Doom” and Joseph Russo have in common? 

The prediction of the Housing Crisis and overall credit crunch were obvious to both at the same time. Why would Obama or McCain want to be President now anyway? 

Please allow me to explain; Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund on Sept. 7th 2006. He announced that a crisis was brewing and an unprecented “housing bust” would soon be here. 

Professor Roubini analyzes economic reports, studies economic data, understands international macroeconomics and finance and actively follows the Global economy. During September 2006, Joseph Russo also predicted to his friends and clients that the real estate market would suffer a slowdown and the bubble appeared to be bursting.  

Joseph Russo is a full time Real Estate Professional who has his pulse on the Real Estate Market throughout the nation, mostly by way of phone calls to his office of buyers moving into his area, Charlotte, NC; and analyzing market via the internet.   His market area of Lake Norman, NC is one of the most popular destination areas in the Country. 

Although Mr. Russo is a college graduate; his education is far inferior as compared to Mr. Roubini’s education, who obtained his PhD. from Harvard University. Dr. Roubini has served this Country as an economic adviser, and has served under various administrations and speaks at least four languages. Joseph, once he gets excited about a property, can barely speak the English language and you certainly can tell he’s from South Brooklyn, NY and not from the South, in the US, where he now resides. 

Dr. Roubini has traveled the world and Joseph Russo has never been out of the US. Actually, Joseph did go to London once, for – guess what – an international real estate conference. Nouriel Roubini certainly has the educational advantage, International familiarity, economic experience and well deserved respect of Economists throughout the World.

Joseph Russo, although accomplished in his own right and well respected in his industry, only has a fraction of the economic experience and education of Dr. Roubini. However, Joseph Russo has a direct, infallible connection to consumer spending pulse and economic movement throughout the US; his 36 years of real estate experience and his cell phone.   

That’s right, a cell phone was all Joseph needed to predict that an economic crisis was brewing.  

At the height of the market Joe’s phone was averaging close to 100 phone calls a day from prospective purchasers.  In September of 2006, the phone calls stopped coming in and Joe thought the phone system had crashed. Shortly thereafter, however, frantic phone calls were coming in to him that were meant for the Loss Mitigation Department of Countrywide Mortgage. (I’ll explain – Joe had a toll free number which was inadvertently given to Countrywide customers. Joe spent most of the day giving out the correct Countrywide phone number to the callers.) 

Calls from consumers with mortgage and foreclosures troubles increased dramatically and calls from prospective buyers stopped.  No fancy studies or papers or statistics were needed by Joseph.  

It was very clear to him that the cruise ship named “USS Economy” was in full reverse. Fewer calls from buyers and more calls from those in default were a clear indication that the party was over and the “financial hangover” was about to begin. These two Experts had the same instincts and came to the same conclusion by means of different methods.

Dr. Roubini based his conclusion on economic indicators and Joseph Russo based his prediction on phone calls.  I liken this instinct to the animals who ran into the highlands of Thailand during the 2004 Tsunami. 

I suppose you are wondering what the point of this story is?  Simply, if one of the most intelligent economists in the World saw this coming, and a savvy, and small businessman saw this coming as well; where was everybody else? Are all the statistical models useless or was everyone else afraid to admit the problem. 

Loose lending or should I say “fool-loose” lending was obviously rampant in the previous years, and lower underwriting standards were the norm, in exchange for increased consumer spending which was encouraged by the government. The banks made windfall profits, while giving household pets with stated incomes, mortgages.  Time to “Pay the Piper”, as the saying goes. 

We are now in “economic full reverse” with the consumers now suffering through bank failures, vaporizing pensions, destroyed credit histories, devastated family conditions and the worst case imaginable, people committing suicide over foreclosed properties.  

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Joseph Russo is an Author, Real Estate and Credit Expert, an Author/Journalist - Television & Radio Show Commentator and Professional Speaker as well as a Radio Show host and host of a NC cable TV show series, "Financial Self Defense" Joseph (more...)
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