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Friday, September 30, 2011

Nouriel Roubini - The 10 actions that should be taken to revive economic growth in Europe

Europe must move forward. We must revive economic growth, the EU's global competitiveness, sustainable development of all European countries. The challenges facing the Old Continent require immediate response.



Nouriel Roubini is Chairman and co-founder of Global Economics, a professor of economics at Stern School of Business at the University of New York. As the first alert on the impending crisis before 2008.

Sunday, September 25, 2011

Inflation will soon be the last problem that central banks will fear

Nouriel Roubini : while monetary policy has limited impact when the problems are excessive debt and insolvency rather than illiquidity, credit easing, rather than just quantitative easing, can be helpful. The European Central Bank should reverse its mistaken decision to hike interest rates. More monetary and credit easing is also required for the US Federal Reserve, the Bank of Japan, the Bank of England, and the Swiss National Bank. Inflation will soon be the last problem that central banks will fear, as renewed slack in goods, labor, real estate, and commodity markets feeds disinflationary pressures.

Saturday, September 24, 2011

The reasons for advanced economies’ high unemployment and anemic growth are structural

Nouruiel Roubini : The reasons for advanced economies’ high unemployment and anemic growth are structural, including the rise of competitive emerging markets. The appropriate response to such massive changes is not protectionism. Instead, the advanced economies need a medium-term plan to restore competitiveness and jobs via massive new investments in high-quality education, job training and human-capital improvements, infrastructure, and alternative/renewable energy. Only such a program can provide workers in advanced economies with the tools needed to compete globally.

Friday, September 23, 2011

The risks ahead are not just of a mild double-dip recession, but of a severe contraction that could turn into Great Depression II

Nouriel Roubini : The risks ahead are not just of a mild double-dip recession, but of a severe contraction that could turn into Great Depression II, especially if the eurozone crisis becomes disorderly and leads to a global financial meltdown. Wrong-headed policies during the first Great Depression led to trade and currency wars, disorderly debt defaults, deflation, rising income and wealth inequality, poverty, desperation, and social and political instability that eventually led to the rise of authoritarian regimes and World War II. The best way to avoid the risk of repeating such a sequence is bold and aggressive global policy action now. - in a recent article

Thursday, September 22, 2011

Emerging economies have more ammunition available and should ease their monetary and fiscal policies.

Nouriel Roubini : Emerging-market economies have more policy tools left than advanced economies do, and they should ease monetary and fiscal policy. The International Monetary Fund and the World Bank can serve as lender of last resort to emerging markets at risk of losing market access, conditional on appropriate policy reforms. And countries, like China, that rely excessively on net exports for growth should accelerate reforms, including more rapid currency appreciation, in order to boost domestic demand and consumption. - in a recent article

The European Union should strengthen its banks with public money

The European Union should strengthen its banks with public money, and spread money to small and mid-size businesses.

The European Central Bank should reverse its decision to boost interest rates

The European Central Bank should reverse its "mistaken decision" to boost interest rates, while others such as the Federal Reserve, Bank of Japan, Bank of England and Swiss National Bank do more. (This was written before the Fed's latest action.)

Wednesday, September 21, 2011

Roubini : European Banks Need Major Recapitalization

Europe’s banks, struggling amid a sovereign debt crisis, need a “major recapitalization” if the region is to avert disaster,
Stimulus is needed and there is “not enough emphasis being given to economic growth in the euro zone,”
there is no single measure that will save the region from economic crisis. The euro zone must lower interest rates,
“huge mistake” to raise rates this year. Nouriel Roubini told reporters in Johannesburg today - in Bloomberg

Tuesday, September 20, 2011

Roubini calls on Greece to return to the drachma

“The recent debt exchange deal Europe offered Greece was a rip-off, providing much less debt relief than the country needed”, said Nouriel Roubini in the Financial Times article. Roubini calls for Greece to leave the Euro and go back to the Drachma , "A return to a national currency and a sharp depreciation would quickly restore growth and competitiveness, as it did in Argentina and many other emerging markets that abandoned their currency pegs," he said.

Even if leaving the euro area would be hard, a return to the national currency “will restore competitiveness and growth, as was the case for Argentina and other emerging markets that have cut monetary anchors”, "Overnight, the foreign liabilities of Greece's government, banks, and companies would surge," said Roubini. "Yet these problems can be overcome. Argentina did so in 2001, when it converted its dollar debts into pesos. The U.S. did something similar in 1933, when it depreciated the dollar and repealed the gold clause."

"Like a broken marriage that requires a break-up, it is better to have rules that make separation less costly to both sides" said Roubini. - in The Financial Times article

Monday, September 19, 2011

Roubini : Greece Should Default And Abandon The Euro

Nouriel Roubini : Greece should begin an orderly default, voluntarily leave the euro zone and return to the drachma in a bid to escape a vicious cycle of insolvency, low competitiveness and depression,

The recent debt exchange deal Europe offered Greece was a rip-off, providing much less debt relief than the country needed,

Its best current option would be to reject this agreement and, under threat of default, renegotiate a better one,... - in the Financial Times.

Saturday, September 17, 2011

The real public debt of China is 80 percent of GDP

Nouriel Roubini : If you are looking at the Chinese banks they have a huge amount of exposure to state and local government to state owned enterprise and to these special purpose vehicles that have done the financing of the local investment , has been several trillion Yuans , now we estimate that about 30 percent of these loans are going to go into default and becoming non performing , so the aid is going to be certainly on the Chinese banks some of them are going to be back stopped by the local government if the local government cannot do the job it is going to be the central government , at the end of the day the banking crisis are going to be losses of some agents of the government either state owned banks or the provincial government or the central government and that's why the official debt of China is 17% of he GDP at the central level but when you add the banks the state and local government and all the other liabilities we are already estimating that the public debt of China is already 80% of GDP , so you are going to have an MPL problem , you'll have a public debt and deficit problem then you'll going to have an investment boom going bust problem and that's why we are going to have a hard landing in China by 2013 at the latest - in Bloomberg

Friday, September 16, 2011

Nouriel Roubini : We are entering new recession

Nouriel Roubini : In August 0% jobs & retail sales growth. September looks worse based on initl unemp claims & other indicators. We are entering a recession

At this point the question is not double dip or not but rather how deep the recession will be: answer depends on policy response & EZ crisis - Nouriel Roubini via Twiter

Thursday, September 15, 2011

Chris Whalen vs. Nouriel Roubini on Karl Marx Being Right

Chris Whalen : "Marx created the term 'capitalism'. It's a pejorative, insulting description that says all economic activity is a matter of greed," . "If you're any sort of libertarian. If you believe in American principles of democracy and free enterprise, just the fact we use the term 'capitalism' should insult you. We need new labels." Whalen explains

Wednesday, September 14, 2011

Severe Depression Without Massive New Stimulus

Nouriel Roubini : “I thought a few months ago that the perfect storm would be 2013, but now, the economic weakness in the U.S., eurozone and U.K. is front-loaded.” “So we’re going to double-dip earlier. The climax of it could be 2013 or it could be already earlier.” “There’ll be more monetary easing and quantitative easing done by the Fed and other central banks, but the credit channel is broken.” Nouriel Roubini told Bloomberg News. “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.” “America’s recent data have been lousy: there has been little job creation, weak growth and flat consumption and manufacturing production. Housing remains depressed. Consumer, business and investor confidence has been falling, and will now fall further.” “Until last year policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery.” Roubini writes. “Zero policy rates, QE1, QE2, credit easing, fiscal stimulus, ring-fencing, liquidity provision to the tune of trillions of dollars and bailing out banks and financial institutions – all have been tried. But now we have run out of rabbits to reveal.” he added.


Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC. Roubini tells Brloomberg , "we're going into a recession based on my numbers" and that the Federal Reserve and other authorities no longer have the ability to provide emergency support.

Monday, September 12, 2011

Eurozone needs more fiscal consolidation

Brussels (5 September) Nouriel Roubini speaking at the Nicolas Berggruen institute press conference about the future of Europe. : If Europeans do not move forward in the direction of greater economic and fiscal union, there will be a financial breakdown , or disentegration , with every country going in its own direction , first of all that would damaging for everybody but also it will be very damaging for the core of the Eurozone in Germany which benifited significantly from a common market a common currency and stability that has led to significant opportunity

Sunday, September 11, 2011

We need to do massive stimulus; otherwise, there is going to be another Great Depression

Nouriel Roubini  : “I thought a few months ago that the perfect storm would be 2013, but now, the economic weakness in the U.S., eurozone and U.K. is front-loaded,” “So we're going to double-dip earlier. The climax of it could be 2013 or it could be already earlier,” “It depends on what policy tools are available " With the eurozone in crisis, facing a record-high cost for insuring bank debt, there is a 60% probability that most advanced economies will fall into a recession, . Roubini said. “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.”

Saturday, September 10, 2011

The ECB has made The Biggest Mistake in the past 10 years

The European Central Bank must signal this week that it will cut interest rates, reversing the "biggest mistake" it has made in the past 10 years, economist
"It is not enough to do fiscal austerity because if you don't have economic growth you can try to reduce debt and deficit, but if the denominator [collapses] then you're not going to achieve sustainability," Nouriel Roubini told CNBC Europe in an interview Monday

Thursday, September 8, 2011

Invest in Cash in US Dollars

Nouriel Roubini : mostly keep it in cash, especially in dollars, as the U.S. currency tends to strengthen during financial crises. Roubini said he would also favor government bonds of countries with small budget deficits and low public debt, such as Canada and Australia, and avoid stocks and commodities. If we see a nasty global recession, then risky assets, starting with equities, are going to hurt and going to hurt big time, - in Bloomberg

There is a 60 percent probability that most advanced economies will fall into a recession

Nouriel Roubini : I thought a few months ago that the perfect storm would be 2013,. But now, the economic weakness in the U.S., Euro zone and the U.K. is front loaded. So we’re going to double dip earlier. The climax of it could be 2013, or it could be already earlier. It depends on what policy tools are available..... There’s a 60 percent probability that most advanced economies will fall into a recession, while authorities are running out of options to provide emergency support, You need to restore economic growth, not five years from now, you need to restore it today,” Roubini said. “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 - in Bloomberg

Monday, September 5, 2011

Italy needs a new technical government NOW

Nouriel Roubini : "The only thing you really need to do now is to change the government." Nouriel Roubini said in an interview with the Italian news paper La Repubblica, commenting on the situation of the Italian economy. "Everything else comes next," he added, "but this is the most pressing, most importantly of interventions on the deficit: Italy must send home the present Cabinet, which has lost all international credibility, and put to work a group of competent economists interested in the fate of the country, not only in their own interests. " " A GOVERNMENT TECHNICAL NOW ". Should be " the task force," "to study the necessary measures."Roubini said, "Italy is on the brink of recession, perhaps it is already in it. This is the truth. It is no longer just a matter of attitude and behavior of the prime minister, it is the government as a whole to have given evidence of incapacity. " Roubini added

Saturday, September 3, 2011

Roubini : We are in a worse situation than we were in 2008

"No More Policy Rabbits Left" Nouriel Roubini, Co-founder and Chairman of Roubini Global Economics said Speaking at the Ambrosetti Forum on the shores of Lake Como, in Northern Italy on Friday 02 Sep 2011 “We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious.” he added ."The market may rally but unless the real economic data moves with asset prices, then eventually asset prices are going to go," he said. "Last year the economic data was already improving when QE2 was introduced." "Every time we had an economic downturn and a market downturn, we had all the policy bullets, we'd take another policy rabbit out of the hat and try to restimulate the economy and the market, but this time around we'll have fiscal austerity throughout advanced economies, our ability to backstop banks and financial institutions is limited by the fact that there is resistance to it and not every country can weaken their currency," he explained

Friday, September 2, 2011

Roubini : risk of a double dip recession in most advanced economies

Nouriel Roubini : I do not see a global recession in the sense that the emerging markets that account for half of the economy are going still grow robustly , but I certainly see a situation where a risk of a recession or a double dip is significant not only in the US but also in the most advanced economies , if you look at the peripheral of the Eurozone they are already in a contraction Greece Ireland Italy Portugal and Spain the UK had no economic growth for three quarters....." Nouriel Roubini speaking to Bloomberg from Cernobbio in Italy - Sept 02 2011

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