"It’s going to go crashing down, in an ugly way.", says Roubini

Nouriel Roubini has been one of the Keynesian Fools to see the problem well in advance, and even if he has no solutions to the problem except the usual Keynesian stimulus and deficit spending, he is good nonetheless at spotting the problems. He thinks more regulation is required where the solution is just turning off the tap of limitless flowing dollars (End the Fed!).

Here are some excerpts from his the latest interview with Index Universe.com with which I do happen to agree:

In my view, rising commodity prices are not justified by the fundamentals.

There’s a huge bubble, because we have zero rates in the U.S., zero rates around the world and a huge carry trade. Everyone is borrowing at zero interest rates in dollars and getting a capital gain because the dollar is weakening, so they are borrowing at negative rates. And then they invest in risky assets: commodities, equities, credit. We’re creating a bigger bubble than before.

It’s going to go crashing down, in an ugly way. That’s the basics of the argument.

[...]

I don’t know when the correction is going to occur, it could be a while longer, but eventually it will be a pretty ugly correction, across many different asset classes.

[...] So there’s no inflation, and there’s not going to be for the time being. Yeah, it [Gold] can go above $1,000, but it can’t move up 20-30 percent unless we end up in a world of inflation or another depression. I don’t see either of those being likely for the time being. Maybe three or four years from now, yes. But not anytime soon.