Wednesday, April 8, 2015

Germany cannot stand idly by in the spending splurge

by Nouriel Roubini for Gulf News :

The latest economic data from the Eurozone suggests that recovery may be at hand. What is driving the upturn? What obstacles does it face? And what can be done to sustain it?

The immediate causes of recovery are not difficult to discern. Last year, the Eurozone was on the verge of a double-dip recession. When it recently fell into technical deflation, the European Central Bank (ECB) finally pulled the trigger on aggressive easing and launched a combination of quantitative easing (including sovereign-bond purchases) and negative policy rates.

The financial impact was immediate: in anticipation of monetary easing, and after it began, the euro fell sharply, bond yields in the Eurozone’s core and periphery fell to very low levels, and stock markets started to rally robustly.

This, together with the sharp fall in oil prices, boosted economic growth.
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 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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