Saturday, April 2, 2011

Roubini : Fed, ECB Policy Divide May Be Destabilizing

New York University economist Nouriel Roubini, speaks from Cernobbio, Italy, with Bloomberg Television on Apr. 01, 2011
Nouriel Roubini :"...Banking risk becomes sovereign risk when the government bailout financial institutions but eventually that leads to a sovereign debt crisis and that can damage the real economy and the financial system " " I understand the logic of the ECB decision They’re likely going to raise rates in April and then continue for a few times this year because the core of the Eurozone is growing fast and headline inflation is above target But you have five countries in the periphery where there’s almost no growth or contraction, where you have severe banking problems, where you’ve had a loss of competitiveness, where there is a need to restore economic growth and I fear that an early hike is going to increase the growth fragility, the worsening of competitiveness with stronger Euro , the financial fragility both of the banking system and of the government so on net that's a risk "

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