Nouriel Roubini on The Korea Herald about the debt problems

NOURIEL ROUBINI Unsustainable private-debt problems

LONDON -- The Great Recession of 2008-2009 was triggered by excessive debt accumulation and leverage on the part of households, financial institutions, and even the corporate sector in many advanced economies. While there is much talk about de-leveraging as the crisis wanes, the reality is that private-sector debt ratios have stabilized at very high levels.
By contrast, as a consequence of fiscal stimulus and socialization of part of the private sector's losses, there is now a massive re-leveraging of the public sector. Deficits in excess of 10 percent of GDP can be found in many advanced economies, and debt-to-GDP ratios are expected to rise sharply - in some cases doubling in the next few years.

As Carmen Reinhart and Ken Rogoff's new book "This Time is Different" demonstrates, such balance-sheet crises have historically led to economic recoveries that are slow, anemic, and below-trend for many years. Sovereign-debt problems are another strong possibility, given the massive re-leveraging of the public sector.

In countries that cannot issue debt in their own currency (traditionally emerging-market economies), or that issue debt in their own currency but cannot independently print money (as in the euro zone), unsustainable fiscal deficits often lead to a credit crisis, a sovereign default, or other coercive form of public-debt restructuring.
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Nouriel Roubini is Professor of Economics at the Stern School of Business, New York University and Chairman of RGE Roubini Global Economics , a global macroeconomic consultancy.

ROUBINI Indonesia another BRIC in the wall ?

After Brazil, Russia, India, and China here comes Indonesia , is it another brick in the wall ? Nouriel Roubini chairman of RGE Monitor and a professor at the Stern School of Business, New York University wrote an excellent article on the Korea Herald , here is a snapshot :
NEW YORK - Conventional wisdom rarely survives a good stress test, and few tests have been as stressful as that which the global economy has endured over the past 24 months. A healthy season of reappraisal has dawned, shining a new light on boom-time notions like the value of opaque markets, the untouchable status of the American consumer, or the wisdom of deregulation.

One piece of bubble wisdom that has escaped relatively unscathed, however, is the assumption that the "BRIC" countries - Brazil, Russia, India, and China - will increasingly call the economic tune in years to come. The BRIC notion, coined in a 2003 Goldman Sachs report, is not all bad: at 75 percent correct, it scores a good deal better than most economic prognostications of the day.

Yet the economic crisis that began in 2008 exposed one of the four as an impostor. Set the vital statistics of the BRIC economies side-by-side and it becomes painfully obvious that, in the words of the old Sesame Street game, "One of these things is not like the other."
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