The Bear Market Case

I posted three somewhat bullish articles in a row so here is the other side.
Martin Wolf at the FT makes the bear case with the help of Nouriel Roubini. in this article:

America’s economy risks mother of all meltdowns

Recently, Professor Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*. At that time, his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.

The article goes on to spell out Professor Roubini's list of twelve steps to a very bad recession. I don't know if these things will happen (some have already) but they are all certainly possible. The most encouraging thing I can say is that people are talking about these risks now whereas a year ago such talk was dismissed out of hand.

PS. Mr Roubini has an interesting site here.