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2022-07-26

Nouriel Roubini said the US is facing a deep recession

 as interest rates rise and the economy is burdened by high debt loads, calling those expecting a shallow downturn “delusional.”

Historically high debt ratios

That differs from the 1970s, he said, when the debt ratio was low despite the combination of stagnant growth and high inflation known as stagflation.

“This time around, we have a confluence of stagflation and of a severe debt crisis,” Roubini said. “So it could be worse than ‘70s and post-GFC.”

Bloomberg 25 July 2022

https://www.bloomberg.com/news/articles/2022-07-25/shallow-recession-calls-are-totally-delusional-roubini-warns


On Friday I was in Davos in a panel on the "Ups and Downs of EMU" where ECB head Trichet, Italian Economy Minister Tremonti, a few other EU officials and myself were supposed to discuss the following questions:

Will EMU collapse in the future? Which country will exit first? What will be the consequences of a break-up of EMU? How to avoid that? And what are the prospects for the Growth and Stability Pact?

My remarks caused a stir with Minister Tremonti who interrupted me in the middle of my remarks, went into a temper tantrum and shouted - to the consternation of all participants - to me: "Go Back to Turkey!!".

Nouriel Roubini, 28/1 2006

Bland oraklen på World Economic Forum i Davos i januari var det en fråga som dominerade: Skulle bostadsbubblan i USA ta kål på högkonjunkturen?

En enda deltagare i världens mest kvalificerade panel, professor Nouriel Roubini, talade om en krasch. De övriga förutspådde ett nästan lika soligt 2007 som 2006.

Niklas Ekdal, DN signerat 18/8 2007

https://www.internetional.se/roubinimeltdown0711.htm


Biden Doesn't Expect US to Go Into Recession

https://www.youtube.com/watch?v=73SJksNA81k


The financial crisis of 2008, or Global Financial Crisis (GFC), 

was a severe worldwide economic crisis that occurred in the early 21st century.

https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008


As Night Follows Day, Stagflation Follows the 2020-21 Stimulus

It’ll be dark, with interest hikes and sluggish GDP figures aligning as if to produce a solar eclipse.

 We are only in the early stages of a monetary tightening whose effects haven’t even begun to be felt yet—the results will start to appear in the second half of this year

Gerard Baker WSJ 25 July 2022 

https://www.wsj.com/articles/as-night-follows-day-stagflation-day-follows-the-2020-21-stimulus-recession-fed-fomc-interest-rates-gdp-output-inflation-11658773238



In typical plain-vanilla recessions, US and global equities tend to fall by about 35%. 

But, because the next recession will be both stagflationary and accompanied by a financial crisis, the crash in equity markets could be closer to 50%.

Nouriel Roubini Project Syndicate 29 June 2022

https://englundmacro.blogspot.com/2022/06/the-next-recession-will-be-marked-by.html


Mistakes made by the BOE, (FSA), and the Treasury 2008 

In your new book, The Chancellors: Steering the British Economy in Crisis Times, you highlight mistakes made by the BOE, the Financial Services Authority (FSA), and the Treasury during the 2008 global financial crisis. Which mistakes hold the most salient lessons for the challenges the UK is facing today?

In retrospect, I think the scale of quantitative easing will be remembered as a policy error, the long-term consequences of which are only now emerging. 

The Volcker Rule – which bars banks from engaging in proprietary trading or investing in hedge funds or private equity funds – is a far more sensible solution to the “too-big-to-fail” problem.

Howard Davies, Chairman of NatWest Group and former Deputy Governor of the Bank of England.

Project-Syndicate 9 August 2022

https://www.project-syndicate.org/say-more/an-interview-with-howard-davies-2022-08



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