Nouriel Roubini Sees Risk of Global Recession
Nouriel Roubini took the seat in this week’s Big Interview chair with the Wall Street Journal. He says the risk of a global recession is greater than 50 percent and believes the next two to three months will be decisive in revealing which way the economy will go. Nouriel says the secular force impinging most on the global economy is deleveraging in indebted nations in the west. The leverage was concentrated in the private sector but the over-indebtedness is now manifest in the public sector as well.
Interview video below
Edward here. In my view, in Europe, with the eurozone peripheral economies and the UK in austerity programs, the outlook is bleak. Recession is likely. In the US, the self-imposed austerity doesn’t have a lot of bite, so the US has a greater chance of avoiding recession in the near term. Austerity in the US will be revisited, however. Watch unemployment claims as an indicator of recession. Right now, they are falling.
I will have a lot more commentary in the coming few days.
and more risk or rioting?
I doubt that a world recession is likely until we have another crisis. That will come with european defaults or something that will have been missed. The US and Europe will fall into recessions but the rest of the world may slow but will still grow. It might seem like a recession in China and India but there will still be growth.
There will be another banking crisis before long. There is already a slow run on Greek and Irish banks. I expect the same on Italy before long. As for the core eurozone countries I suspect that Belgium will join France in the panic zone soon enough.
Interesting paper on the relationship between Austerity and social unrest
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1899287
thanks!
He is a promoter of his own interest! My private banker was in a meeting where after a discussion of finacial crisis he peddled a crisis management computer system!
The relationship between austerity and social unrest is something I have been explaining for the last 3 years!
Maybe, but he fails to respect the support an 8% fed deficit provides.
Yes but with tax increases of the agenda and only spending cuts being considered the deficit might stay high as the economy slumps. Also the deficit is only flowing into corporate balance sheets. Consumers are not benefitting yet. So a slowing economy will increase the debt burden for consumers.