Tuesday, May 27, 2014

Ukraine War could Continue & Last for a while

Roubini: Suppose that Russia at this point decides to effectively either to destabilize, invade the eastern province of Ukraine. Two things will happen. The stance (ph) of the West will have to become more Russia and Russia could have (inaudible) going as far as limiting the supply of gas not just to Ukraine but also to Western Europe. Secondly, the NATO, even if they’re not going to have a military intervention, they’ll have certainty provide some military support to the government in Kiev. And that means that this war could escalate for quite a while. And therefore from a financial market point of view, there may be contagion deriving two (ph) advanced economy’s financial market, especially in the eurozone.

Schatzker: But could it really escalate for quite a while? Because we know that if Putin wants to exercise force in a big way, he can. And there’s really nobody capable of responding to it other than the United States.

Roubini: Well, the situation is such that even if he wanted to use force there (inaudible) first of all. Secondly, he’s not going to invade all of Ukraine. And you don’t know for how long a military conflict of this sort is going to continue, especially if the US and Europe were then to support militarily the government in Kiev. This war could continue and last for a while. So I’m saying this is not my baseline, but there is certainly downside risk that that will happen. But even a baseline (inaudible) remains lingering for a while, at some point investor may become worried about it. 
- in www.businessinsider.com

 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics
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