Dec 17: Nouriel Roubini on the next "shoe to drop"

Part 3, December 17 2008: Nouriel Roubini, Professor of Economics at Stern School of Business at NYU and chairman of RGE Monitor, expects further financial stress. "A thousand if not more" hedge funds could go bust all at the same time. This means the selling of distressed assets could continue. Another source of stress is emerging market economies; there are about a dozen on the verge of a potential financial crisis, such as Latvia, Estonia, Lithuania, Hungary, Bulgaria, Romania, Turkey, Ukraine, Pakistan, Indonesia, Korea, Ecuador, Argentina and Venezuela. Other skeletons could come out of the opaque financial system, similar to the Bernard Madoff scandal. The dollar is likely to weaken over the medium term. US and global equities could see declines of another 15 to 20 per cent in the next few months, and a bear market rally will fizzle out. Commodity prices could fall another 15 to 20 per cent. Cash and cash-like instruments like safe government bonds are still the safest bet for the next few months.