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.