Nouriel Roubini : ".....Markets are sort of schizophrenic , until a month ago we were telling Italy and Spain and the others cut the budget deficit primary surplus , fiscal compact they are gradually doing it , now the recession is getting worse "“There’s this vicious circle with the deficit that doing austerity makes the recession worse,” he said. “Without growth, the socio-political backlash will become overwhelming for some governments.” - in CNBC Interview 30 March 2012
Nouriel Roubini Being interviewed by CNBC at Villa d'Este during the Ambrosetti Forum this Fri 30 March 2012 "The euro zone needs a real depreciation in the periphery to achieve the restoration of growth, external balance and competitiveness," economist Nouriel Roubini told CNBC at the Ambrosetti workshop in Italy.
Roubini Nouriel : " Based on new durable goods orders US capex spending could be flat in real terms in Q1. Once 2011 tax benefits expired capex totally slumped " - Roubini said today in a twitter message
Nouriel Roubini : ...I would not underestimate the effect of gasoline today, in a number of U.S. states, being already at $4.00 a gallon -- and it could be so in many other states. Psychologically, once you're above the $4 mark, it has an impact on consumer confidence. And in the summer, prices tend to go up another 20 or 30 cents. The higher those oil prices are, the higher the chance that has a negative effect on consumer confidence, on disposable income, and on the economy. And it's not just in the U.S. -- the price of oil is very high in Europe and in many other parts of the world. So I would let other people assess the risk of a conflict, but confidently I see oil prices from here going higher, rather than lower. The one thing I worry about more than the Eurozone is oil. - in foreignpolicy.com
Nouriel Roubini : ‘If the drums of war grow louder, oil prices could rise in a way that will most likely cause a global growth slowdown’
TODAY’s fragile global economy faces many risks: the risk of another flare-up of the euro-zone crisis; the risk of a worse than expected slowdown in China; and the risk that economic recovery in the US will fizzle (yet again). But no risk is more serious than that posed by a further spike in oil prices.
The price of a barrel of Brent crude, which was much less than $100 last year, peaked recently at $125. The reason is fear. Not only are oil supplies plentiful, but demand in the US and Europe has been lower. - Nouriel Roubini wrote in a recent Project Syndicate article
Arnab Das of RGERoubini Global Economics told CNBC today that Portugal to Follow Greece “We’re going to get a recession this year but it will be milder than it would have been. The European Central Bank has done an awful lot without which we’d be in a banking crisis. It has bought banks a lot of time, between 18 months to three years,” Arnab Das told CNBC.
Nouriel Roubini : "Chinese home price deflation is ongoing as housing bubble deflating. And property sales are 25% down y-o-y in first two months of 2012 " said Roubini in a twitter message from his phone from Beijing China where he is at presently
Nouriel Roubini : "China will rise further to become world's #1 economy btw 2020 & 2030. This will happen even if China were to have some time a hard landing"
"Chinese leaders have done much right as China has had 10% growth for 30 yrs, is the 2nd world economy & the largest manufacturer & exporter" Roubini added in a twitter message from Beijing today
Nouriel Roubini : My feeling is that the economic data are mixed. Certainly creating 200,000 jobs per month as opposed to only 100,000 is a positive signal. But while the data for the last 2 to 3 months were consistently surprising on the upside, some recent data suggests an element of caution. For example, real consumption spending has been flat for three months in a row. Durable goods orders -- a proxy for capital spending by the corporate sector -- are sharply down in January after the tax advantages expired at the end of last year. Construction spending is still down. Home prices are still falling. Today, the number on the trade balance in January came in worse than expected. So if you look at the macro supply data it looks better. But the demand data, whether it's consumption or residential or net exports, suggests there's still softness.
My view of it is still that economic growth is going to be soft, anemic, and below-trend. I think the tail risk of an outright recession conditional on external shock, like eurozone turmoil or oil or China is a small risk right now compared to six months ago. But I think the data is not consistent with the views that we are going to start growing at 3 percent plus in the next 12 months.
Growth for this year is going to be maybe 2 percent. And by next year, what's going to happen is that -- regardless of whether Obama is reelected or a Republican (say, Romney) there will be, first of all, a meaningful fiscal drag, because mandated spending cuts start to be triggered if they refuse to do the draconian spending cuts on defense or discretionary funds. All the tax cuts -- dividends, capital gains, estate, income taxes -- expire and not all of them are going to be fully renewed. The payroll tax cut is also supposed to be one year, now it's two years, but we cannot have it forever. And discretionary transfer payments are going to be reduced and government spending is on the way down. So you have a fiscal drag. Disposable income growth has been boosted for the last year and a half ... so some of the growth of last year and this year has been stolen from the future. And because of the fiscal drag and the effect of that on household disposable income, I see further economic softness even next year. - in foreignpolicy
Nouriel Roubini : Iran, with its back to the wall as sanctions bite harder (especially the recent SWIFT and central bank restrictions, and Europe’s decision to stop importing Iranian oil), could react by increasing tensions in the Gulf. Eventually, it could easily sink a few ships to block the Strait of Hormuz, or unleash its proxies in the region, which include pro-Iranian Shia forces in Iraq, Bahrain, Kuwait, and Saudi Arabia, Hezbollah in Lebanon, and Hamas and Islamic Jihad in Gaza.
Recent attacks on Israeli embassies around the world appear to signal Iran’s reaction to the covert war being waged against it, and to the tightened sanctions, which are aggravating the effects of the regime’s economic mismanagement. Likewise, the recent escalation in cross-border fighting between Israel and Gaza-based Palestinian militants could be a sign of things to come.
The next few weeks could bring a reduction in tensions, as the US, France, Germany, the United Kingdom, China, and Russia go through another round of attempts to prevent Iran from developing nuclear weapons or the capacity to produce them. But if this attempt fails, as is likely, one cannot rule out that, by summer, Israel and the US agree that, sooner rather than later, force will have be used to stop Iran. - in project-syndicate
Nouriel Roubini : The last three global recessions (prior to 2008) were each caused by a geopolitical shock in the Middle East that led to a sharp spike in oil prices. The 1973 Yom Kippur War between Israel and the Arab states led to global stagflation (recession and inflation) in 1974-1975. The Iranian revolution in 1979 led to global stagflation in 1980-1982. And Iraq’s invasion of Kuwait in the summer of 1990 led to the global recession of 1990-1991.
Even the recent global recession, though triggered by a financial crisis, was exacerbated by spiking oil prices in 2008. With the barrel price reaching $145 in July of that year, oil-importing advanced economies and emerging markets alike faced a recessionary tipping point.
The risk that Israel’s threat to attack Iran’s nuclear installations will, in fact, lead to an outright military conflict may still be low, but it is growing. Israeli Prime Minister Binyamin Netanyahu’s recent visit to the US demonstrated that Israel’s fuse is much shorter than the Americans’. The current war of words is escalating, as is the covert war that Israel and the US are allegedly engaging in with Iran (including killings of nuclear scientists and use of cyber-warfare to damage nuclear facilities). - in project-syndicate
Nouriel Roubini : Today’s fragile global economy faces many risks: the risk of another flare-up of the eurozone crisis; the risk of a worse-than-expected slowdown in China; and the risk that economic recovery in the United States will fizzle (yet again). But no risk is more serious than that posed by a further spike in oil prices.The price of a barrel of Brent crude, which was well below $100 in 2011, recently peaked at $125. Gasoline prices in the US are approaching $4 a gallon, a damaging threshold for consumer confidence, and will increase further during the high-demand summer season.
The reason is fear. Not only are oil supplies plentiful, but demand in the US and Europe has been lower, owing to decreasing car use in the last few years and weak or negative GDP growth in the US and the eurozone. Simply put, increasing worry about a military conflict between Israel and Iran has created a “fear premium.”
The last three global recessions (prior to 2008) were each caused by a geopolitical shock in the Middle East that led to a sharp spike in oil prices. The 1973 Yom Kippur War between Israel and the Arab states led to global stagflation (recession and inflation) in 1974-1975. The Iranian revolution in 1979 led to global stagflation in 1980-1982. And Iraq’s invasion of Kuwait in the summer of 1990 led to the global recession of 1990-1991. - in project-syndicate
Nouriel Roubini : I'm not the geopolitical expert and I will let Ian and others figure out the probability of an attack on Iran this year before the U.S. election or after the election -- or of an Israeli attack alone. Whether it's 20 percent, or 30 or 50 -- I think that view will change over time. But it's likely that the second quarter of 2012 is going to be the period when final round of giving a chance to diplomacy is going to be attempted. If that fails, maybe at that point both the U.S. and Israel are going to say, "Unless you back down, we may eventually attack you." So you have to time how much these things are going to affect markets.
But even without an attack outright, there's a war of words between the U.S., Israel, and Iran, and this war of words has been escalating. There is also a covert war, because Israel and the U.S. allegedly have been killing some of the scientists, engaging in sabotage through cyberwarfare, and now Iran is reacting. They've tried to kill a bunch of Israeli diplomats around the world and, if sanctions become more binding, they could start making noises about other threats. Brent [Crude] that used to be $90 per barrel is already in the $120-125 range. But if that war of words and covert war escalates, there's a possibility that -- even short of a military confrontation -- oil prices could become high enough that it becomes material for the economy.
I would not underestimate the effect of gasoline today, in a number of U.S. states, being already at $4.00 a gallon -- and it could be so in many other states. Psychologically, once you're above the $4 mark, it has an impact on consumer confidence. And in the summer, prices tend to go up another 20 or 30 cents. The higher those oil prices are, the higher the chance that has a negative effect on consumer confidence, on disposable income, and on the economy. And it's not just in the U.S. -- the price of oil is very high in Europe and in many other parts of the world. So I would let other people assess the risk of a conflict, but confidently I see oil prices from here going higher, rather than lower. The one thing I worry about more than the eurozone is oil. - in foreignpolicy.com
Nouriel Roubini : On Russia, Ian, you're right that Russia and China may get closer to each other, but I think the biggest strategic threat to Russia is China. You've got a land mass in Siberia that is as big as the United States, where there are barely 15 million people, and there are millions of Chinese now moving across the border of Mongolia -- buying land, starting to produce. As you know, possession is nine-tenths the law. So strategically, at some point, Russia's going to realize that the only one who can defend them from losing Siberia is the United States and Europe. So I don't understand the logic of their views. They'll be better off being friends with the U.S. and Europe than with China.- in foreignpolicy
Nouriel Roubini : Russia used to grow at 8 percent a year between 1998 and 2008. Then the global financial crisis happened and there was a contraction, but since then their economic record has been between 3.5 to 4 percent -- even with oil prices going from $30 a barrel in 2009 to well above $100 now. And the problem with Russia is that unless you do structural reforms by reducing the role of the government in the economy and state-owned enterprises, and developing the private sector more -- unless you do a variety of market-oriented structural reforms -- the potential growth rate of Russia may not be much higher than 4 percent. And in an economy where there's a huge amount of rent extraction occurring because of an excessive reliance on oil, energy, and raw material, and as long as those prices are high, the incentive to do reforms is going to be limited. Yes, now there's a movement especially in Moscow and in the middle classes that is resisting him. But Putin won. We'll see how much that is a reflection of the majority vote as opposed to ballot rigging. He may be slightly weakened compared to what he was a year ago, and he might be nudging a little more to the center and offering slightly more reforms than he would have otherwise done, but in my view reforms in Russia are going to occur at a mediocre, suboptimal pace relative to what's desirable. They'll be cosmetic rather than radical. - in foreignpolicy.com
Black Swan,Nassim Taleb Supporting Dr.Ron Paul ."The only candidate I trust is Ron Paul," says Nassim Taleb, "The Black Swan" author. He also shares what he fears will be the next "black swan" event for the U.S. economy.
Nassim Taleb : " I watched the election and something wrong is going on. only one candidate Ron Paul seems to have grasped the issues and is offering the right remedies for the central problems we facing. so i came out just to support -- I'm not involved in politics. I'm a risk based person. but from my risk base vantage point i think one candidate represents the right policies when it comes to the big four, and that candidate is Ron Paul. what are the big four? the first one is deficits. of course, governments self-feeding bureaucratically. second one is the fed. he's going after the fed. the only one with the guts to do it. the third one is militarism. i like defense but not defense because it becomes self-feeding again. and the fourth one is that notion that America, that central notion that America is about is about resilience. and you don't achieve that through bailouts. you need the economy to stay vital and you need a certain rate of failure"
Nouriel Roubini : "Merrill Lynch : recent good economic data depends on 3 factors: weather, delay in foreclosure process & lagged impact of lower gasoline prices"
"Those 3 positive factors are temporary as weather effect on jobs will fade out in spring, foreclosures will increase & oil price is rising" - in a twitter message
Nouriel Roubini : The worse-case scenario is a protracted conflict. If there's an effect on the supply of oil and gas from the Gulf, and production and exports from Iran go for a while to zero, oil could go to $170,$180, $200 a barrel.
Then, the question is how long it remains there. Of course, there are now discussions in Washington on how to respond. The amount of oil in the Strategic Petroleum Reserve is finite, but if you're not going to use it in this situation, when else are you going to use it?
The reality is that if you think about the last three major global recessions, there were all caused by a geopolitical shock in the Middle East that led to spike in oil prices. The Yom Kippur War in 1973 led to the global recession from 1974 to 1979; the Iranian revolution in 1979 led to spike in oil prices and the 1980-1982 recession; and even in 1990, the Iraqi invasion of Kuwait brought a temporary spike in oil prices that led, among other factors, to a U.S. and global recession.
So if the conflict is severe and protracted and the increase in oil prices in significant, I would say we're talking about not just a U.S. recession but a global recession. And this time around, we're also coming out of a global financial crisis where now we have a huge amount of private and public debt in many advanced economies, like we did not have in 1973 or 1979 or 1990. So the global economy could not take a kind of protracted oil shock coming at a time where there's already a painful process of deleveraging, with fragility in the balance sheets of governments and the private sector as well.
said Nouriel Roubini with his frequent partner Ian Bremmer in an interview with Foreign Policy
Portugal is likely to be the next to restructure its debt and exit the euro zone, economistNouriel Roubini said on CNBC yesterday Friday 9th March 2012 , Portugal being the most at risk amongst the PIIGs nations , Greece is still insolvent Roubini said "Greece will be the first country to exit the euro zone, not this year, maybe later next year." he explained
Nouriel Roubini : while US data have been surprisingly encouraging, America’s growth momentum appears to be peaking. Fiscal tightening will escalate in 2012 and 2013, contributing to a slowdown, as will the expiration of tax benefits that boosted capital spending in 2011. Moreover, given continuing malaise in credit and housing markets, private consumption will remain subdued; indeed, two percentage points of the 2.8% expansion in the last quarter of 2011 reflected rising inventories rather than final sales. And, as for external demand, the generally strong dollar, together with the global and eurozone slowdown, will weaken US exports, while still-elevated oil prices will increase the energy import bill, further impeding growth. - in project syndicate
Greece's private creditors got a very sweet deal they should stop complaining wrote Dr Nouriel Roubini today in the Financial Times “The reality is that private creditors got a very sweet deal, while most actual and future losses have been transferred to the official creditors,” Roubini wrote.“The official sector began restructuring its claims well before the private sector creditors. Maturities were lengthened and the interest rate on those loans reduced, repeatedly,” he wrote.“They should stop complaining. They will take some losses but those losses are limited. Indeed, the fact that the new bonds are expected to be worth more than the old bonds suggests that this PSI exercise has further transferred losses to official creditors,” he wrote. - via CNBC
Nouriel Roubini: ....Meanwhile, not only is fiscal austerity pushing the Eurozone periphery into economic free-fall, but the loss of competitiveness there will persist as relief at the waning prospect of disorderly defaults strengthens the euro's value. To restore competitiveness and growth in these countries, the euro needs to fall towards parity with the US dollar. And, while the risk of a disorderly Greek collapse is now receding, it will re-emerge this year as political instability, civil unrest, and more fiscal austerity turn the Greek recession into a depression.
Nouriel Roubini : ....Elsewhere in Asia, Singapore's economy shrank for the second time in three quarters at the end of 2011. India's government predicts 6.9 per cent annual GDP growth in 2012, which would be the lowest rate since 2009. Taiwan's economy fell into a technical recession in the fourth quarter of 2011. South Korea's economy grew at a mere 0.4 per cent in the same period - the slowest pace in two years - while Japan's GDP contracted at a larger-than-expected 2.3 per cent, as the yen's strength weighed down exports. - in Project Syndicate
Nouriel Roubini nicknamed Dr. Doom and lately Dr. Realist by CNBC , is a professor of economics at the Stern School of Business, New York University and chairman of RGE Roubini Global Economics, an economic consultancy firm . Prof. Nouriel Roubini A world-class economist who offers an unflinching look at the global meltdown and distinctive insights into its course going forward. His research on financial crisis in emerging economics has yielded a unique and now vindicated approach to future collapses. Roubini speaks on the global economic outlook and its implications for the financial markets. From his analysis of past collapses of emerging economies, he has identified common factors that support his predictions of crisis in the US and world markets. He has held several high-level advisory positions in the US government and international finance organisations, published numerous policy papers and books on key international macro-economic issues and is regularly cited as an authority in