Roy Batty notes this interview in wheresmyfuckingmoney.com [!] – Zombie Housing, Zombie Banks, Zombie Governments: Economy Cassandra Says Marx was Right.
Fortune Magazine: “In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he’s a sage.”
Paul Krugman (2009): “Nouriel Roubini was right. At a time when the likes of Alan Greenspan were dismissing concerns about excessive home prices and declaring that banks were stronger than ever, Roubini warned that there was a monstrous bubble in the housing market and that the bursting of that bubble would cause much of the financial system to collapse. And so it has turned out, with even the most seemingly outlandish of Roubini’s predictions matched or even exceeded by reality.”
“If you are not hiring workers, there is not enough labor income, there is not enough consumer confidence, there is not enough consumption, there is not enough final demand.
“And the last two to three years we’ve had actually worse than this because we had the massive redistribution of income from labor to capital, from wages to profits, inequality of income and wealth has increased. The margin of propensity to spend of a household is greater than the margin of propensity to spend of a firm because they have a higher margin of propensity to save, firms compared to households. So that redistribution of income and wealth makes the problem of excessive lack of aggregate demand even worse.
“Karl Marx had it right. At some point capitalism can destroy itself because you cannot keep on shifting income from labor to capital without not having excess capacity and a lack of aggregate demand, and that’s what’s happening.”