NYU Stern School of Business professor and leading economist Nouriel Roubini, asserted that the current financial conundrum is worse than that in 2008 and there is a 60% likelihood many of the leading world economies will fall into recession imminently.
“You need to restore economic growth… today,” the co-founder and chairman of Roubini Global Economics LLC told CNBC last week at the Abrosetti Forum near Milan, Italy. “In the short term, we need to do massive stimulus, otherwise there’s going to be another Great Depression. Things are getting worse and the big difference between now and a few years ago is that this time around we’re running out of policy bullets.”
Currently stuck in a low-growth rut, authorities are out of last resort policy options and contingency plans, as sovereign nations do not have the ability or trust to bail out distressed banks any longer.
The economist, known for his bearish views on the world economy, added that another financial crisis is brewing at this very moment in developed nations around the world.
While the U.S. announced last Thursday that unemployment is steadily stuck at 9.1%, worldwide surveys illustrate declining business and decaying consumer confidence.
While, Roubini suggests that further fiscal stimulus across the map is inevitable, at home, Dr. Doom, as dubbed by the Business Insider, expressed his belief that a third round of quantitative easing may have unexceptional results.
He worries that with a broken credit channel, “the market may at this time be rallying on the expectation of QE3.”
In London at the beginning of the week, he stated that “economic weakness in the U.S. and euro zone” has lead to a fear and questioning that the euro cannot survive the continuing crisis. He pessimistically added that with the U.K. front-loaded; “we’re going to double dip earlier…” than he originally anticipated for 2013.
Furthermore, the economist anticipates a “hard landing” in China’s future when 30% of Chinese banks’ several trillion dollar loans will go into default.
It’s hard to say whether Dr. Doom’s omen for a second global Great Depression is in the cards as economic data presents a muddled picture.
The Business Insider responded to Roubini’s interview by restoring hope and reducing panic, stating there is no “clear indication” of a looming recession at this time, pointing to typical end-of-summer blues and ongoing backlash from the unprecedented S&P credit downgrade.
Roubini recommended that any large amounts of money should be kept “in cash” as currency, particularly the American dollar, tends to strengthen at the onset of financial turmoil. In addition, he suggested avoiding stocks and commodities, favoring government bonds in countries with low budget deficits and public debt such as Canada and Australia.
Our Newest Service: The FlashTrading Service Is Now Live! This options trading service is unique in its approach: low capital at risk, frequent market commentary based on the futures markets and real-time options trading, not to mention the options insights you can't help but pick up! Try It Today
S&P 500 - Last 5 Years
Remember, you are in control your email alerts! You can receive alerts for more than 25 free research report alerts including: The “10.0” Report, The Insiders Report, ETF Leaders Report, and The Focus List.
