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Saturday, August 11, 2012

Nouriel Roubini on Threats to the Global Economy

Nouriel Roubini : The underlying economic forces are partially independent of policy choices. I don’t think that if [John] McCain had been elected, the economy would be any better than it is today. Maybe even worse. And therefore, I think that once you have a crisis, once you have too much debt or once you have painful deleveraging, that cost of deleveraging has to occur over a period of many years, and economic policy is not going to make much of a difference. However, policymakers do make a difference, because the Great Recession could have ended up a great depression if we had not learned the lessons of the Great Depression. The case of deleveraging, whether it’s ugly or semi-ugly or less ugly, depends on doing some of the right things. I think that having massive monetary easing, having massive fiscal easing, having backstopped the financial system properly—sometimes not totally properly—made a difference. In Europe, in fact, where policy has been to accelerate the private- and the public-sector deleveraging, we are already double dipping. So policy can make a difference. - in Business Week
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