Tag: Nouriel Roubini

Cross posted from The Stars Hollow Gazette

US stocks continue to dip and oil fell to below the $100 mark as the Europeans are balking at austerity only budgets that have exacerbated the recession. Nobel prize winning economist, Nuriel  Roubini weighed in on the crisis in Spain and Greece.

“Greece is going to be the first country that’s going to restructure and exit,” he said. “Others will leave also.”

“By the end of the year Spain is going to lose market access,” Roubini said in a subsequent CNBC interview. “They’re going to require a bailout. That will keep them out of the markets for a year or two. That’s not going to work out – then maybe two years down the line then you have a restructuring of the debt…And eventually even Spain could exit the euro zone-but it’s not something that’s going to happen in 12 months.”

Roubini also predicted that Spain economic situation was similar to Greece and Portugal and would require a bail out but with caveats:

And yet despite the clear signs of failure in the existing bailout countries, the EU looks set to pursue an unchanged plan in Spain. But the crucial difference between Spain and the bailout countries is size. If things go wrong in Greece, Portugal and Ireland, a second bailout is affordable. But there can only be one roll of the dice for a country as large as Spain.

A bailout package would buy some time for Spain, but time will only help if it is used to generate economic growth. By making private claims on the sovereign junior to the claims of the troika (European Commission, European Central Bank and International Monetary Fund) even a bailout risks reducing the chances of it regaining market access. Moreover, with economic indicators showing Spain sinking further into recession, a turnround in the country’s economic performance would require a significant shift in policy: monetary easing by the ECB, a weaker euro, fiscal stimulus in the core, less front-loaded austerity in the periphery, more international firewalls and debt mutualisation.

Cross posted from The Stars Hollow Gazette

Bloomberg TV’s Margaret Brennan speaks to Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC. Roubini tells Brennan, “we’re going into a recession based on my numbers” and that the Federal Reserve and other authorities no longer have the ability to provide emergency support.

There seems to a consensus here. Just last week Nobel Prize winning Economist Joseph Stiglitz told Bloomberg the same thing:

“The unemployment situation in the U.S. is very severe and very probably going to get worse,” Stiglitz told reporters today at a conference in Lindau, Germany. “There’s a very high probability we’ll go into double dip.”

snip

Stiglitz said calls by policy makers to engage in deficit- cutting austerity measures were heading in “exactly the wrong direction.”

“The most important way to address the deficit is to get America back to work, to get the economy back to full employment,” Stiglitz said at an annual gathering of Nobel Prize-winning economists. “Austerity is going to get us predictably into trouble. Spend the money on investments, and those investments will lead to higher growth.”

Two other points were made about the current economic crisis by Paul Krugman. One is that the economy has not really recovered and that the Federal Reserve needs to take firmer action to stimulate job growth. The non-recovery is best illustrated with this chart provided by Krugman:

Krugman’s second point is about debt, federal and personal, that there has not been an explosion in debt over the past few years

There have been hints about President Obama’s jobs plan that he will present to a joint session of Congress Thursday night but it needs to be big and bold but that’s doubtful with this president.

WILTON, CT-Michael Chandler looks out the windows of his sun room, past the swimming pool and guest cottage, to the wide backyard where his two children are playing with their pet dalmatian, Scotty. At a time when Americans everywhere are sharing the struggle of a once-in-a-generation recession, Chandler can’t help but wonder how he and his family fell through the cracks.

“It’s just not fair,” said the 49-year-old real estate developer and grandson of oil baron Duncan Chandler. “Everyone is worrying about an uncertain future and coming together to express their outrage, and I don’t get to be a part of it.”

Staring out at the ornate garden where workers were installing a large marble fountain, Chandler sighed and added, “It’s like I don’t even exist.”

According to the multimillionaire, the past 18 months have been incredibly difficult to endure, as he is often left feeling excluded from an American populace that includes millions who struggle every day to make ends meet. Chandler, who watched helplessly as his enormous fortune easily withstood the market freefall, has been “completely left out” of one of this nation’s most significant cultural moments.

“Everybody’s suffering,” Chandler said. “And here I am, not scrimping and saving at all, with no demoralizing periods of financial hardship, or frantic weeks living paycheck to paycheck. What about me, you know? Where’s my struggle?”

“Everyone’s supposed to get a fair shake at this misery,” Chandler added. “Even incredibly wealthy people of privilege like me.”

[snip]

“Every month they announce tens of thousands of layoffs,” Chandler said, “and every time, I’m not one of them. No matter what I say or do, it’ll never be me. My only memory of this historic point in time will be the prosperity I have always known.”

Added Chandler, “Dear God, when’s this recession going to end?”

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One of the best and most refreshing changes established by the Obama Administration has been its reliance on intellectuals, scientists, and experts rather than lobbyists and ideologues. Across a broad swath of federal departments, pragmatism seems once again to be valued. Unfortunately, with the world economy imploding, Obama continues to rely on the advice of corporatist insiders, and their advice is predictably corporatist. There also seems to be a bit of myopia going on.

On Saturday, Joan Walsh warned Obama supporters not to be taking credit for the previous week’s slight market rally:

As someone who has repeatedly defended Obama from GOP efforts to blame him for the current crisis and to deride the “Obama economy” only 55 days into his presidency, I think the administration could be playing a dangerous game. Live by the week’s economic news, die by it as well. If the Dow dives next week, or retail spending dips again, does that mean the stimulus failed?

Right on cue, Vice President Biden then weighed in:

“Consumer confidence is slightly up. The market is slightly up,” Biden said. “It’ll go down again, but the people are beginning to figure out that the president’s got a plan and he believes we can work our way through this.”

Um.

Nouriel Roubini has been warning that there may be “dead cat bounces,” or “bear market suckers rallies,” and there’s no reason to think the latest is anything else. Which means that Biden should maybe be a little more circumspect about taking a day trader’s view of a one week market rally.

Nobel Prize winning economist Joseph Stiglitz, last week: