Nouriel Roubini : we ll be lucky if this year we are going to grow by barely 2%

Nouriel Roubini : “We may be going back to stall speed in the U.S. economy,”
“The optimists today are saying the U.S. is on the cusp of a self-sustaining recovery,” he said, adding: “My view of it is: The data suggest that we’ll be lucky if this year we’re going to grow [by] barely 2%.” Roubini said at the Milken Institute’s 2012 Global Conference in Beverly Hills. - via LA Times

Roubini : Europe needs a Bazooka

Nouriel Roubini : "If you can't either devalue the euro to a real depreciation, inflate yourself, or grow yourself out of this problem, or deflation is not going work, the only solution is going to be to give up the euro and go to a national currency,"
"But if enough of those countries do that, the collateral damage in terms of losses to the creditors is going to be massive. So a breakup is going to be a mess." - in CNN Money

Roubini : The Financial Contagion in The Eurozone, would be significant

Nouriel Roubini : European banks still have "meaningful exposure" to central Europe, Asia and Latin America. "If something disorderly, either disorderly default and/or disorderly breakup were to occur in the Eurozone, certainly financial contagion would be significant," - in CNN Money

Roubinis 401k is all in Stocks

Nouriel Roubini said he hasn't missed the run up in the stock market this year. His 401k is all in stocks. In 2007 and 2009, it was in cash - in CNN Money

A Shift Toward Natural Gas not for tomorrow

Nouriel Roubini : "People are too optimistic about how fast the revolution in natural gas will happen," said Roubini. The infrastructure simply can't be built or rebuilt to make it feasible for cars, trucks and trains to use natural gas in the next 12 to 24 months. A more reasonable time horizon, he said, would be 20 to 30 years. - in CNN Money

Roubini : The Recession is deepening in the Eurozone Periphery

Nouriel Roubini : Final April PMIs for the Eurozone confirm that the periphery recession is deepening while even the core is entering a contraction - Roubini said in a twitter message today

Roubini : The Fed to announce sterilized QE in June

Nouriel Roubini : " We at RGE expect the Fed to announce sterilized QE in June when Operation Twist ends" - in a twitter message today

The Eurozone Recession is getting much worse

Nouriel Roubini : "The Eurozone is obviously double-dipping and its recession is getting much worse; it is time for the ECB to act aggressively via formal QE." Roubini said in a twitter message today

Roubini : Spanish unemployment To hit 30%

Nouriel Roubini : Spanish unemployment rate almost 25%. To hit 30% if depressionary front-loaded fiscal austerity is continued...says Roubini in a twitter message today

Roubini : America and Europe need Weaker Currencies

Nouriel Roubini : “If domestic demand is going to be anemic and weak in this fiscal adjustment because of private and public sector deleveraging you need net exports to improve to restore growth,”
“In order to have an improvement in net exports you need a weaker currency and a much more easy monetary policy  to help induce that nominal and real depreciation that is not occurring right now in the euro zone,”
“That’s one of the reasons why we’re getting a recession  that’s even more severe,” said Roubini. - in CNBC

Roubini : GDP Growth in Q1 Disappointing

Nouriel Roubini : " Q1 GDP growth disappointing &, after 2 quarters of outsized inventory increases, a Q2 payback may occur. Final demand still up a poor 1.6% " says Nouriel Roubini in a twitter message today " For how long can consumption grow much faster than income and households run down their savings as income growth in Q1 was very mediocre? " " For how long can consumption grow at a 2.9% rate when real disposable income is growing only 0.4%? Not long as you can't keep cutting savings" he added in another message

Roubini : The Eurozone is Double-Dipping

Nouriel Roubini : "The Eurozone is obviously double-dipping and its recession is getting much worse; it is time for the ECB to act aggressively via formal QE." - in a twitter message

Roubini: The ECB can Prevent The European Recession From Getting Worse

Nouriel Roubini : "So if domestic demand is going to be anemic and weak in this fiscal adjustment because of private and public sector deleveraging you need net exports to improve to restore growth. That’s what happened in emerging market crises. But in order to have an improvement in net exports you need a weaker currency and a much more easy monetary policy to help induce that nominal and real depreciation that is not occurring right now in the euro zone. That’s one of the reasons why we’re getting a recession that’s even more severe. So, can’t we think of monetary policy as helping to induce the change in relative prices that’s necessary to have a restoration of growth if domestic demand is weak through net export improvements?" Read more: From Reuters>>>>

Roubini : Europe stuck between Hollande and Holland

Nouriel Roubini :" Europe stuck between Hollande and Holland today: both providing a political shock.." says Nouriel Roubini in a twitter message today "EZ Fiscal Compact DOA even before ratification. So much for credible/binding fiscal rules during a severe recession that make it more severe" he added in a second message ,socialist Francois Hollande is likely to become the next french president meanwhile European stock markets and the euro tumbled Monday, as political uncertainty in two key euro-zone countries, France and the Netherlands (Holland), pushed investors into the traditional haven of German government bonds.

NOURIEL ROUBINI: Monetary Union at risk unless growth resumes

Nouriel Roubini : SINCE last November, the European Central Bank (ECB), under its new president, Mario Draghi, has reduced its policy rates and undertaken two injections of more than €1-trillion of liquidity into the euro-zone banking system. This led to a temporary reduction in the financial strains confronting the debt-endangered countries on the euro zone’s periphery, sharply lowered the risk of a liquidity run in the euro zone’s banking system and cut financing costs for Italy and Spain from last year’s unsustainable levels. At the same time, a technical default by Greece was avoided and the country implemented a successful restructuring of its public debt. A new fiscal compact — and new governments in Greece, Italy and Spain — spurred hope of credible commitment to austerity and structural reform. And the decision to combine the euro zone’s new bail-out fund (the European Stability Mechanism) with the old one (the European Financial Stability Facility) significantly increased the size of the euro zone’s firewall. But the ensuing honeymoon with the markets turned out to be brief. Interest-rate spreads for Italy and Spain are widening again, while borrowing costs for Portugal and Greece remained high all along. And, inevitably, the recession on the euro zone’s periphery is deepening and moving to the core, namely France and Germany. Indeed, the recession will worsen this year. - in Project Syndicate

Roubini : In France Hollande could win by a wide margin in 2nd round

Nouriel Roubini : "I arrived to Paris: latest election polls show Sarkozy slipping in race against Hollande. Hollande could win by a wide margin in 2nd round" Roubini wrote in a twitter message a couple of days ago

Nouriel Roubini In Almaty Kazakhstan

Nouriel Roubini : "I am in Almaty, Kazakhstan to give a keynote speech at an International Risk Management Conference" - Roubini wrote in a twitter message today

The End of the Merkozy axis in Europe

Nouriel Roubini :"Off to Paris now. Only 4 days to the 1st round of the prez elections. If Hollande eventually wins it would be the end of the Merkozy axis" Roubini wrote yesterday in a twitter message to his followers "Phaseout of Merkozy will not lead to a new Merkollande axis. Rather risk of a Merkel-Hollande rift & a periphery challenge to Fiscal Compact" he added in another message today

Roubini : The labor market and The Economy weakening

Nouriel Roubini : " Rise in initial unemployment claims + weak March payrolls confirms that labor market/economy is weakening" - in a twitter message today

Roubini : European Recession Poised to Worsen on Cuts,

Economies that use the euro probably will shrink further as governments cut spending and banks seek to lend less “It’s like a slow-motion train wreck,” ,
Greece won’t be the last euro-zone country to restructure debt and may exit the euro in 2013 or 2014 along with another small country said Professor Nouriel Roubini today at a keynote speech at a BICE conference in Santiago, Chile.

Roubini : Vacation Is Over, Euro Zone Crisis Back In 2012

Nouriel Roubini : "The trouble is that the eurozone has an austerity strategy but no growth strategy. And, without that, all it has is a recession strategy that makes austerity and reform self-defeating, because, if output continues to contract, deficit and debt ratios will continue to rise to unsustainable levels. Moreover, the social and political backlash eventually will become overwhelming. That is why interest-rate spreads in the eurozone periphery are widening again now. The peripheral countries suffer from severe stock and flow imbalances. The stock imbalances include large and rising public and private debt as a share of GDP. The flow imbalances include a deepening recession, massive loss of external competitiveness, and the large external deficits that markets are now unwilling to finance. Without a much easier monetary policy and a less front-loaded mode of fiscal austerity, the euro will not weaken, external competitiveness will not be restored, and the recession will deepen. And, without resumption of growth – not years down the line, but in 2012 – the stock and flow imbalances will become even more unsustainable. More eurozone countries will be forced to restructure their debts, and eventually some will decide to exit the monetary union."
Read the entire piece at Project Syndicate >>>>>>>

Roubini : The Recession on the Eurozone periphery is deepening and moving to the core

Nouriel Roubini : .....But the ensuing honeymoon with the markets turned out to be brief. Interest-rate spreads for Italy and Spain are widening again, while borrowing costs for Portugal and Greece remained high all along. And, inevitably, the recession on the eurozone’s periphery is deepening and moving to the core, namely France and Germany. Indeed, the recession will worsen throughout this year, for many reasons. First, front-loaded fiscal austerity – however necessary – is accelerating the contraction, as higher taxes and lower government spending and transfer payments reduce disposable income and aggregate demand. Moreover, as the recession deepens, resulting in even wider fiscal deficits, another round of austerity will be needed. And now, thanks to the fiscal compact, even the eurozone’s core will be forced into front-loaded recessionary austerity. Moreover, while über-competitive Germany can withstand a euro at – or even stronger than – $1.30, for the eurozone’s periphery, where unit labor costs rose 30-40% during the last decade, the value of the exchange rate would have to fall to parity with the US dollar to restore competitiveness and external balance. After all, with painful deleveraging – spending less and saving more to reduce debts – depressing domestic private and public demand, the only hope of restoring growth is an improvement in the trade balance, which requires a much weaker euro. - in Project-Syndicate

Roubini : Darker days ahead for The Eurozone as Recession sinks in

Nouriel Roubini : “The trouble is that the eurozone has an austerity strategy but no growth strategy. And, without that, all it has is a recession strategy that makes austerity and reform self-defeating, because, if output continues to contract, deficit and debt ratios will continue to rise to unsustainable levels. Moreover, the social and political backlash eventually will become overwhelming.
That is why interest-rate spreads in the eurozone periphery are widening again now. The peripheral countries suffer from severe stock and flow imbalances. The stock imbalances include large and rising public and private debt as a share of GDP. The flow imbalances include a deepening recession, massive loss of external competitiveness, and the large external deficits that markets are now unwilling to finance.
Without a much easier monetary policy and a less front-loaded mode of fiscal austerity, the euro will not weaken, external competitiveness will not be restored, and the recession will deepen. And, without resumption of growth – not years down the line, but in 2012 – the stock and flow imbalances will become even more unsustainable. More eurozone countries will be forced to restructure their debts, and eventually some will decide to exit the monetary union.”
Read the entire piece at Project Syndicate >>>>>>>

Nouriel Roubini : Europe’s Short Vacation

NEW YORK – Since last November, the European Central Bank, under its new president, Mario Draghi, has reduced its policy rates and undertaken two injections of more than €1 trillion of liquidity into the eurozone banking system.

This led to a temporary reduction in the financial strains confronting the debt endangered countries on the eurozone’s periphery (Greece, Spain, Portugal, Italy, and Ireland), sharply lowered the risk of a liquidity run in the eurozone banking system, and cut financing costs for Italy and Spain from their unsustainable levels of last fall.
At the same time, a technical default by Greece was avoided, and the country implemented a successful – if coercive – restructuring of its public debt. A new fiscal compact – and new governments in Greece, Italy, and Spain – spurred hope of credible commitment to austerity and structural reform. And the decision to combine the eurozone’s new bailout fund (the European Stability Mechanism) with the old one (the European Financial Stability Facility) significantly increased the size of the eurozone’s firewall.
But the ensuing honeymoon with the markets turned out to be brief. Interest-rate spreads for Italy and Spain are widening again, while borrowing costs for Portugal and Greece remained high all along. And, inevitably, the recession on the eurozone’s periphery is deepening and moving to the core, namely France and Germany. Indeed, the recession will worsen throughout this year, for many reasons.
First, front-loaded fiscal austerity – however necessary – is accelerating the contraction, as higher taxes and lower government spending and transfer payments reduce disposable income and aggregate demand. Moreover, as the recession deepens, resulting in even wider fiscal deficits, another round of austerity will be needed. And now, thanks to the fiscal compact, even the eurozone’s core will be forced into front-loaded recessionary austerity.
Moreover, while über-competitive Germany can withstand a euro at – or even stronger than – $1.30, for the eurozone’s periphery, where unit labor costs rose 30-40% during the last decade, the value of the exchange rate would have to fall to parity with the US dollar to restore competitiveness and external balance. After all, with painful deleveraging – spending less and saving more to reduce debts – depressing domestic private and public demand, the only hope of restoring growth is an improvement in the trade balance, which requires a much weaker euro.
Meanwhile, the credit crunch in the eurozone periphery is intensifying: thanks to the ECB long-term cheap loans, banks there don’t have a liquidity problem now, but they do have a massive capital shortage. Faced with the difficulty of meeting their 9% capital-ratio requirement, they will achieve the target by selling assets and contracting credit – not exactly an ideal scenario for economic recovery.
To make matters worse, the eurozone depends on oil imports even more than the United States does, and oil prices are rising, even as the political and policy environment is deteriorating. France may elect a president who opposes the fiscal compact and whose policies may scare the bond markets. Elections in Greece – where the recession is turning into a depression – may give 40-50% of the popular vote to parties that favor immediate default and exit from the eurozone. Irish voters may reject the fiscal compact in a referendum. And there are signs of austerity and reform fatigue both in Spain and Italy, where demonstrations, strikes, and popular resentment against painful austerity are mounting.
Even structural reforms that will eventually increase productivity growth can be recessionary in the short run. Increasing labor-market flexibility by reducing the costs of shedding workers will lead – in the short run – to more layoffs in the public and private sector, exacerbating the fall in incomes and demand.
Finally, after a good start, the ECB has now placed on hold the additional monetary stimulus that the eurozone needs. Indeed, ECB officials are starting to worry aloud about the rise in inflation due to the oil shock.
The trouble is that the eurozone has an austerity strategy but no growth strategy. And, without that, all it has is a recession strategy that makes austerity and reform self-defeating, because, if output continues to contract, deficit and debt ratios will continue to rise to unsustainable levels. Moreover, the social and political backlash eventually will become overwhelming.
That is why interest-rate spreads in the eurozone periphery are widening again now. The peripheral countries suffer from severe stock and flow imbalances. The stock imbalances include large and rising public and private debt as a share of GDP. The flow imbalances include a deepening recession, massive loss of external competitiveness, and the large external deficits that markets are now unwilling to finance.
Without a much easier monetary policy and a less front-loaded mode of fiscal austerity, the euro will not weaken, external competitiveness will not be restored, and the recession will deepen. And, without resumption of growth – not years down the line, but in 2012 – the stock and flow imbalances will become even more unsustainable. More eurozone countries will be forced to restructure their debts, and eventually some will decide to exit the monetary union.
*Nouriel Roubini is Chairman of Roubini Global Economics (www.roubini.com) and Professor at the Stern School of Business, NYU.
Copyright: Project Syndicate, 2012.
www.project-syndicate.org

Roubini : a very sharp slowdown in China

Nouriel Roubini : "Chinese growth measured as q/q SAAR - rather than y/y as reported - was most likely only 6.9%, a very sharp slowdown" China Posted Weakest Growth in Q1 Since Global Financial Crisis - from Roubini's twitter message

Roubini: Spain Is Free-Falling, No End in Sight

"Spain's industrial production is free falling and the draconian fiscal austerity will make its recession much worse," says Dr Doom Nouriel Roubini, Chairman of Roubini Global Economics, on his Twitter page

Roubini : The draconian fiscal austerity in Spain will make its recession much worse

Nouriel Roubini : Spain's industrial production is free falling and the draconian fiscal austerity will make its recession much worse...- in a twitter message

Roubini : The entire Middle East is a source of tensions that are geopolitical for the global economy

Nouriel Roubini : “Even short of a military confrontation, the war of words is going up and the covert war is going up. These tensions are going to rise,”
“The entire Middle East is a source of tensions that are geopolitical for the global economy.” - in CNBC

Roubini : The painful process of deleveraging is going to continue

Nouriel Roubini : “The painful process of deleveraging is going to continue.” and He added that the central bank is now “close to the limit” of what it can do to boost the European economies. - in CNBC

Roubini : The recovery is Anemic, Subpar, below trend, below potential

Nouriel Roubini : “The recovery is anemic, subpar, below trend, below potential,” “If we avoid a major external or internal shock,” like a military confrontation with Iran or a major default in the euro zone, “we may avoid another recession and that might be good news. But that’s where the good news ends,” said Professor Roubini, - in The New York Times

Nouriel Roubini : ‏Very weak Job Report

Nouriel Roubini : ‏"Very weak job report : payrolls rise much less than expected, average weekly earnings and workweek down" in a twitter message today "Is the "over-hiring", after the "over-firing" in 2008-09, now over? Okun's Law may start to reassert itself as growth stays below potential" Roubini added in another message "The unemployment rate fell only because many discouraged workers who cant find jobs left the labor force. The participation rate fell!" he explained

Roubini : The Euro needs to sink to parity with the US dollar

The Euro needs to sink to parity with the US dollar in order to restore Europe’s peripheral economies to growth, Nouriel Roubini , the economist known as “Dr. Doom” for his bearish predictions, told CNBC Friday.“The euro zone needs a real depreciation in the periphery to achieve the restoration of growth, external balance and competitiveness,” he said at the Ambrosetti Workshop on the shores of Lake Como, Italy. “The periphery needs to have the euro closer to parity with the US dollar.” - via CNBC
Click here to watch the full interview>>>>>>

Roubini : Euro zone needs a divorce

Euro zone needs a divorce: Nouriel Roubini , Like a marriage that no longer works, the euro zone should accept its fate, split up and get divorced, wrote Nouriel Roubini in the Financial Times, together with Arnab Das of RGE "splitting up may be hard to do but it`s better than sticking to a bad marriage". they explained

Roubini : An amicable exit strategy of the PIIGS from the Eurozone would be in everyone’s Interest

In a new oped article with Roubini's Arnab Das for the Financial Times entitled "A Divorce Settlement for the Eurozone" : Nouriel Roubini suggest that problems remain for Greece and other euro zone countries including Portugal and Ireland. Those countries might need further restructuring, they said, adding that the euro zone lacks the essential components needed for a successful monetary union. The duo claim “splitting up may be hard to do but it’s better than sticking to a bad marriage”. - via CNBC

Roubini : Without growth, the socio-political backlash will become overwhelming for some governments

Nouriel Roubini : “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