Nouriel Roubini--the most famous of cosmic bears these days, the man the New York Times dubbed Dr. Doom--doesn't think much of Goldman Sachs' chances of survival. In an opinion piece in Forbes, he argues that Goldman Sachs' and Morgan Stanley's days are numbered, even with their recent capital injections. "If John Mack and Lloyd Blankfein don't want to end up like Richard Fuld, they should do a John Thain today and merge as fast as they can with other large commercial banks." That says it all. He doubts that the world really buys their "conversion" to commercial banks, not without the capital structure of a commercial bank. He errs, however, when he asserts that most of Goldman's business lines are losing money, Goldman argues in its rebuttal. The firm says that Roubini needs to differentiate among specific firms and that Goldman is poised to survive. Roubini, of course, famously predicted that every major independent broker deal would fail. He's been more than half right so far. At this point, Morgan Stanley would appear to be in more danger and more likely to enter a bailout merger.
For more:
- here's the column
- here's the rebuttal
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