Nouriel Roubini ‏: Cyprus mistake wasn't the bailing of large depositors. Rather the bailing of small insured depositors

Nouriel Roubini ‏: A sensible Cyprus deal would have bailed in sov creditors, large depositors above 100k (not small ones) & senior unsecured bank bonded debt

Rather than small insured depositors the bailin should have also included senior unsec bank bond creditors & the sovereign creditors

I wrote in February that a bailin of bank creditors was indeed more likely than that of the sovereign ones Cyprus mistake wasn't the bailin of large depositors. Rather the bailin of small insured depositors & lack of bailin of senior unsec credtrs - via twitter

Eurozone Bailout Cyprus after Greece, Portugal and Ireland. Who is next?

Nouriel Roubini : EZ bailout #4: Cyprus after Greece, Portugal and Ireland. Who is next? Spain has already access to EFSF/ESM for its banks Rather than PSI (bail-in of unsecured creditors of banks & sovereign) or OSI we got HSI(Household Sector Involvement) in Cyprus crisis resol - via twitter

Roubini : In Italy there's the beginning of a political storm

Nouriel Roubini : "In Italy there's the beginning of a political storm. The result of the Italian elections signal that the majority of people are against austerity and not just in Italy also in Lisbon half a million people were in the streets and 25 percent unemployment in Greece and Spain, 50 percent amongst young people and there is restlessness," - in a recent interview with CNBC

Nouriel Roubini : we'll get a Clash between Italy and Germany and the ECB

Nouriel Roubini : "In this time the economy will get worse given the political uncertainty, less investment, less job hiring and less consumption. There's a meaningful chance that the new [political] forces in Italy, whatever combination there is, these will be significantly against austerity and then we'll get a clash between Italy and Germany and the ECB," - in CNBC

Fed Won't Stop Easing Until 2014

The U.S. will not end its quantitative easing program before 2014, according to Christian Menegatti, managing director of research at Roubini Global Economics. Menegatti, who works alongside well-known economist Nouriel Roubini , said quantitative easing will continue throughout 2013 and an interest rate cut will not be on the cards until 2015. The U.S. central bank has kept benchmark interest rates close to zero since 2009 and has tried to stimulate the economy also through three rounds of quantitative easing, or bond purchases. The third round was implemented in September last year, known as QE3. "We are talking about 2014, in terms of winding down quantitative easing. We'll have to wait much longer for rate hikes ... well into 2015 and maybe towards the end of it," said Menegatti. - via CNBC

Roubini : Austerity Backlash Big Economic Risk

 Nouriel Roubini, co-founder of Roubini Global Economics LLC, talks about the European sovereign-debt crisis, the outlook for central bank monetary policy and risks of an asset "bubble." He speaks with Bloomberg Television's Mark Barton from the sidelines of the Ambrosetti workshop in Cernobbio, Italy. (Source: Bloomberg)

Roubini : Global Equity Rally Masks Risk From Europe to U.S.

Nouriel Roubini : “Those risks are currently somehow under-priced by the market,” he said today in an interview. “They may be contained in the first half of the year, but they may re-emerge.” “Markets are underestimating how much the sequester and the gridlock in the United States could have negative effects on the economy and eventually on the market,” Roubini said. - in Bloomberg

Roubini : US Will Suffer Payback For Not Implementing Euro-Style Economic Austerity

Nouriel Roubini Says US Will Suffer ‘Payback’ For Not Implementing Euro-Style Economic Austerity, Predicts 1.5% GDP Growth For The Year Speaking Friday from the annual Ambrosetti Forum in Cernobbio, Italy , “I think that we have another year in the U.S. of growth below trend ... one-and-a-half [percent] is the best estimate,” he told CNBC from Italy on Friday. “We have postponed the fiscal austerity, unlike the euro zone and the United Kingdom, and now we stole some growth from the future; we have to start the fiscal consolidation, and therefore there will be some payback from the mistakes made in the past.”

Nouriel Roubini Warns High Growth Crucial for Bulgaria

According to Roubini all important challenges that Bulgaria faces depend on the recovery of strong economic growth. "Good macroeconomic framework, low inflation and deficit helped the country, but the old growth model does not work any more and a new one is needed," said the economist. According to him, this new model can be found in investments in the private sector, structural reforms through "productive" investments, including public-private partnerships. Bulgaria was too strict with austerity as energy prices soared, driving angry voters to the streets and bringing down the Cabinet, Roubini said in an interview for Bloomberg agency before event. "Fiscal austerity is valid and countries should have some fiscal policies. Probably in Bulgaria austerity has been very frontloaded." - At a forum in Sofia on February 26, Roubini, who runs a New York-based consultancy, delivered a speech entitled "Growth opportunities for a small economy in the global world". - via www.novinite.com

Nouriel Roubini Predicts Major Disappointments In Late 2013

According to Nouriel Roubini, A major American economist who predicted the 2008-2009 global crisis, says investors should get ready for major disappointments later this year. He made such a statement during the recent Ambrosetti Forum in Italy.
The founder of Roubini Global Economics LLC reports that tax hikes and spending cuts may hinder the US economic recovery. The professor admits that spending cuts can be implemented at the expense of the income tax as well as the tax for the super-rich.

He says the retail sales industry may see a major decline, which may eventually turn into a disaster.  Mr. Roubini, who is famous for his pessimistic forecasts, assumes that the US GDP will only grow by 1.5% at best.

As a result, financial markets will be shocked by the pace of the US economic slowdown later this year. He expects quarterly income reports that will be published later this year to disappoint investors, thereby making the US stock market retrace. - in www.profi-forex.us

Nouriel Roubini : We Risk QE Wars and Stagnation

Most observers regard unconventional monetary policies such as quantitative easing (QE) as necessary to jump-start growth in today's anemic economies. But questions about the effectiveness and risks of QE have begun to multiply as well. In particular, 10 potential costs associated with such policies merit attention.
First, while a purely "Austrian" response (that is, austerity) to bursting asset and credit bubbles may lead to a depression, QE policies that postpone the necessary private- and public-sector deleveraging for too long may create an army of zombies: zombie financial institutions, zombie households and firms, and, in the end, zombie governments. So, somewhere between the Austrian and Keynesian extremes, QE needs to be phased out over time. - excerpt from an article in The Guardian

ROUBINI: Markets Will Be Shocked By How Much of A Slowdown Is Coming This Year, And Stocks Will Dive

Nouriel Roubini, co-founder and chairman of Roubini Global Economics, tells CNBC Europe that the stock market could be surprised by how much the U.S. economy slows down in the second half of the year, causing it to "correct somehow." Nouriel Roubini was interviewed by CNBC's Ross Westgate in Italy today, and Roubini had a lot of negative things to say a bunch of stuff.

Nouriel Roubini : Stocks Could Correct Later This Year

Nouriel Roubini Brace for Market Correction Later This Year: "These taxes, taxes for the rich are going to significantly reduce disposable income and retail sales have been a disaster. And there are already signals of consumption growth slowing down as well as the sequester and the fiscal drag this year will be 1.5 percent of GDP (gross domestic product) for an economy that was barely growing last year,"

Nouriel Roubini, co-founder and chairman of Roubini Global Economics, tells CNBC Europe that the stock market could be surprised by how much the U.S. economy slows down in the second half of the year, causing it to "correct somehow."

Roubini: Stocks 'Could Correct' Later This Year

Nouriel Roubini, co-founder and chairman of Roubini Global Economics, tells CNBC Europe that the stock market could be surprised by how much the U.S. economy slows down in the second half of the year, causing it to "correct somehow."

Nouriel Roubini: Italy a Tsunami Risk

"In Italy there's the beginning of a political storm. The result of the Italian elections signal that the majority of people are against austerity and not just in Italy also in Lisbon half a million people were in the streets and 25 percent unemployment in Greece and Spain, 50 percent amongst young people and there is restlessness," Roubini told CNBC in an interview today

Roubini : There is not going to be a Grand Bargain on spending cuts and Revenue Increases

Nouriel Roubini : For the U.S., we have kicked the cliff down the road. we have the debt ceiling issue. We have a sequester issue. We have a continued resolution issue. I think they're going to kick the can further down the road. There's not going to be a grand bargain on spending cuts and revenue increases. They will decide to cut spending by $40 billion and then push the problem another three months. And then every three months they are gong to disagree and have another commission. Until there is market pressure, and there is no market pressure in the U.S., they will kick the can down the road. - in Bloomberg

Roubini :QE can create moral-hazard problems by weakening governments

Nouriel Roubini : ....QE can create moral-hazard problems by weakening governments’ incentive to pursue needed economic reforms. It may also delay needed fiscal austerity if large deficits are monetized, and, by keeping rates too low, prevent the market from imposing discipline - in www.project-syndicate.org

Nouriel Roubini ‏: Austerity fatigue in Italy, Greece, Spain and now Portugal

Nouriel Roubini ‏: Austerity fatigue in Italy, Greece, Spain and now Portugal "Portuguese march against austerity, want government out - in twitter

2 Reasons Why Gold Is Falling

"Gold is falling for two reasons. First of all, we have reduced the tail risk of a collapse of the Eurozone, of another global financial meltdown, of a war in the Middle East. And one of the situations where gold does best is when there is huge tail risk. When money is not safe in the banks and you want to drop everything and buy gold. The other extreme situation in which gold does very well is when there is a massive risk of inflation. But in spite of all these QE`s, of course base money has doubled, tripled, soon quadrupled, that`s not creating inflation for 2 reasons. One velocity has collapsed, most of this money hoarded by the banks in the form of excess reserves and there is no credit creation or very little. Secondly there is a huge slack in the labor market, wages are growing less than productivity and labor costs are falling. There is excess capacity, firms don`t have a lot of pricing power. So, the combination of slack in the goods and labor market means that inflation is the least of the concerns for the Fed, for the ECB, for the BOJ, for the BOE and so on. And therefore there`s no reason of inflation for going to gold. That`s why gold is going down." - in Yahoo Finance

Markets Are Underestimating The Sequester And The Gridlock In The United States

“Markets are underestimating how much the sequester and the gridlock in the United States could have negative effects on the economy and eventually on the market.” - in Bloomberg

Roubini : Markets are underestimating The Sequester Negative Effects

Nouriel Roubini : “Markets are underestimating how much the sequester and the gridlock in the United States could have negative effects on the economy and eventually on the market,” - in an interview today with Bloomberg TV

Roubini : Global Equity Rally Masks Risk From Europe to U.S.

The rally in global equity markets isn’t reflecting risks to economic growth from the European debt crisis and U.S. spending cuts, said Nouriel Roubini, the New York University professor famous for predicting the 2008 crisis. Global stocks have gained more than $2 trillion since the start of 2013 as central banks move to stimulate economic growth. Risks including a deeper recession in Europe triggered by austerity measures and political turmoil as well as slower U.S. economic growth may return in the second half of the year, said Roubini, chairman of Roubini Global Economics LLC. “Those risks are currently somehow under-priced by the market,” he said today in an interview. “They may be contained in the first half of the year, but they may re-emerge.” - in Bloomberg

Roubini : QE and other unconventional monetary policies do have important short-term benefits.

Nouriel Roubini : ....In short, policies are becoming more unconventional, not less, with little clarity about short-term effects, unintended consequences, and long-term impacts. To be sure, QE and other unconventional monetary policies do have important short-term benefits. But if such policies remain in place for too long, their side effects could be severe – and the longer-term costs very high. - in www.project-syndicate.org

Nouriel Roubini ‏: Italy is No PPPPP

Nouriel Roubini ‏: Italy is No PPPPP: No Parliament, No Prime Minister, No President, No Pope, No Policy. Instead Policy/Political Uncertainty Galore - in twitter

Roubini : All Italian options lead to new elections

Nouriel Roubini : All Italian options lead - within 6 to 12 months - to new elections. So political uncertainty will lead to policy/market uncertainty - in twitter

Ten QE Questions By Nouriel Roubini

By Nouriel Roubini :

NEW YORK – Most observers regard unconventional monetary policies such as quantitative easing (QE) as necessary to jump-start growth in today’s anemic economies. But questions about the effectiveness and risks of QE have begun to multiply as well. In particular, ten potential costs associated with such policies merit attention.
First, while a purely “Austrian” response (that is, austerity) to bursting asset and credit bubbles may lead to a depression, QE policies that postpone the necessary private- and public-sector deleveraging for too long may create an army of zombies: zombie financial institutions, zombie households and firms, and, in the end, zombie governments. So, somewhere between the Austrian and Keynesian extremes, QE needs to be phased out over time.
Second, repeated QE may become ineffective over time as the channels of transmission to real economic activity become clogged. The bond channel doesn’t work when bond yields are already low; and the credit channel doesn’t work when banks hoard liquidity and velocity collapses. Indeed, those who can borrow (high-grade firms and prime households) don’t want or need to, while those who need to – highly leveraged firms and non-prime households – can’t, owing to the credit crunch.


Read more at http://www.project-syndicate.org/commentary/the-risks-and-costs-of-quantitative-easing-by-nouriel-roubini#3HxRZpoLr2hDdbeX.99

Roubini : Italy is headed to Political, Economic & Financial Chaos

Nouriel Roubini : "Italy is headed to new elections within six months as election results make Italy ungovernable. It is political, economic & financial chaos"
"If investors likely push Italian spreads higher & higher Italy doesn't have now a gov that can sign an MOU and get the support of OMT & ESM"
"Now Italy will not have a functionin government till new elections & you will see a catfight on the new election law & on choice of new Prez" - in twitter

Roubini : QE is Being Used as a Proxy to Currency War

Nouriel Roubini - Yahoo Finance Daily Ticker interview: Currency Wars and the Big Bubble

“The risk of the end game from QE is not going to be goods inflation, it's not going to be a rout in the bond market,” Roubini says. “The risk is like during the 2003-06 [cycle] - we're exiting very slowly and we got an asset bubble.”

ROUBINI: Short-Term Bullish, Long-Term Catastrophe

Nouriel Roubini : It's not going to be that we are going to get a rout in the bond market, because the Fed knows that when they exit, they have to exit slowly – and they can hold to maturity. So, if you're not going to have goods inflation – if you're not going to exit fast enough – then the risk is like during the cycle of 2003-2006, where we're exiting very slowly. It was a measured pace – 25 basis points every six weeks, and we got what? An asset bubble. A credit bubble. A housing, a sub-prime bubble. So, like Jeremy Stein at the Fed says, we are at the beginning of another credit bubble, because we are going to exit so slowly that the financial excess is not going to go into goods inflation; we're not going to have a bond market rout. - in businessinsider

Roubini Forecasting 1.6% GDP Growth in the U.S. this year

Nouriel Roubini : “We believe we will go into sequester so the fiscal drag could be something like closer to 2% of GDP”“It doesn’t look like there will be a last minute deal on the sequester ….the question will be how long the sequester will last.”“The fiscal drag will be another 0.7% or 0.8% of economy” which could lead to another shock in the financial markets and another rating agency downgrade - in Yahoo Finance

Nouriel Roubini : There are disagreement between provincial powers on monetary policy, fiscal policies, exchange rates, currency wars, global imbalances, how to reform the international system of surveillance of the banks

Nouriel Roubini : We have been talking about a G-0 world because there are all these global economic issues in which there is disagreement between provincial powers on monetary policy, fiscal policies, exchange rates, currency wars, global imbalances, how to reform the international system of surveillance of the banks, reforming international financial systems, energy, food security and all the geopolitical issues. On all of these issues we need more coordination and cooperation within the great powers. There is a division of views not just between U.S. and China, but Japan and Europe on fundamental currency issues. - in Davos 2013

Roubini : The Mother of All Bubbles Has Begun

Nouriel Roubini : “The risk of the end game from QE is not going to be goods inflation, it's not going to be a rout in the bond market,” Roubini says. “The risk is like during the 2003-06 [cycle] - we're exiting very slowly and we got an asset bubble.””We could create an asset bubble worse than the previous one which could lead to another financial crisis not this year, not next year but two or three years down the line if we keep on doing these policies,” he says. “You're building the financial leverage that’s going to lead you to [another] bubble and eventual crash.” - in yahoo finance

Roubini : Don’t Underestimate the Economic and Financial Effects of the Sequester

Don’t Underestimate the Economic and Financial Effects of the Sequester: Nouriel Roubini

Daily Ticker -

The stock market suffered its worst day in three months Wednesday after minutes from the last Fed meeting suggested the central bank could slow its asset purchases which have helped keep rates low and stock market prices high. Today stocks are down roughly 0.50%.

Economist Nouriel Roubini of NYU’s Stern School of Business tells The Daily Ticker that it’s not only monetary stimulus by the Fed that’s been driving stocks higher but also “more unconventional monetary policy” from the ECB, Bank of Japan, Bank of England and the Swiss National Bank. That stimulus is aimed at boosting economic growth and it may have helped, helping but the global economy is slowing.

In the fourth quarter, the major economies of the U.S., U.K, Japan and the Eurozone all contracted and they could slow even more because of spending cuts, says Roubini. “The core of the Eurozone has to do it, the U.S. has to do it…and when you have synchronized fiscal contraction the negative effects on economic growth are worse."

He’s forecasting 1.6% GDP growth in the U.S. this year, which would be the slowest pace in three years. On the positive side he sees growth in housing manufacturing and energy production, primarily the “shale gas revolution.” On the negative side: big government budget cuts.
- in yahoo finance : http://m.yahoo.com/w/legobpengine/finance/blogs/daily-ticker/don-t-underestimate-economic-financial-effects-sequester-nouriel-152832809.html?.intl=us&.lang=en-us

Roubini : For the U.S., we have kicked the cliff down the road

Nouriel Roubini : For the U.S., we have kicked the cliff down the road. we have the debt ceiling issue. We have a sequester issue. We have a continued resolution issue. I think they're going to kick the can further down the road. There's not going to be a grand bargain on spending cuts and revenue increases. They will decide to cut spending by $40 billion and then push the problem another three months. And then every three months they are gong to disagree and have another commission. Until there is market pressure, and there is no market pressure in the U.S., they will kick the can down the road. - in Bloomberg

Roubini : The Eurozone Problems have not been Resolved

Nouriel Roubini : The tail risk of something disorderly in the eurozone – like a Greek exit or Italy and Spain losing market access that were severe risks in the middle of last year – have basically been reduced because they have announced this new program of bond purchases, the OMT, there is this new ESM, there is another half a trillion euros out there for banks and sovereign, because there is talk about a banking and fiscal union, and because now Germany has used the words about the periphery of the eurozone that are more constructive.

But if you look at the fundamental problem in the eurozone: lack of economic growth and continued recession, low potential growth because of demographics and lack of reforms, 2) debt sustainability - official and private – are too high, and 3) lack and loss of competitiveness, and a large external deficit that the private sector does not want to finance – those fundamental problems of the eurozone have not been resolved, they may have been pushed by a few quarters, but fundamental problems of growth, competitiveness and sustainability have not been resolved.

Roubini : Oil Prices May Double due to The Geopolitical Instability in The Middle East

Nouriel Roubini says instability in the Middle East, geopolitical disputes in Asia, and fiscal drags in Europe and the U.S. are still . “Instability in the Middle East is an issue: and the instability is not just tension between Israel and Iran – that if there were to become violent they could spike global oil prices to double the current level and tip the global economy into recession. If you look at the Middle East, all from Maghreb, Algeria to Afghanistan and Pakistan, there is geopolitical tension that could have economic consequences.”

Roubini : The Economic Effects of the Global Climate Change are Severe

Nouriel Roubini Climate change causing economic disaster : ....I think there is scientific evidence that these extreme weather events are caused by global climate change and the economic effects are severe , when you get these droughts in Argentina Russia and then they are banning exports of grains and that drives food prices , if you have floods in japan or Thailand then you have distraction in manufacturing activities

Roubini : Instability in the Middle East is an issue

Nouriel Roubini : “Instability in the Middle East is an issue: and the instability is not just tension between Israel and Iran – that if there were to become violent they could spike global oil prices to double the current level and tip the global economy into recession. If you look at the Middle East, all from Maghreb, Algeria to Afghanistan and Pakistan, there is geopolitical tension that could have economic consequences.” - in Davos 2013

Roubini : If The fear premium goes up that is a negative for the global economy

Nouriel Roubini : The combination of all of them going in the wrong direction, and they don’t have to become virulent – if we have a bigger fiscal drag, if the problems in the eurozone become worse, if the landing of China is hard rather than softer, and, short of a war between Israel and Iran, if negotiation and sanction fail, then Israel is going to start to talk about war: the fear premium goes up … and that is a negative for the global economy.”

“Instability in the Middle East is an issue: and the instability is not just tension between Israel and Iran – that if there were to become violent they could spike global oil prices to double the current level and tip the global economy into recession. If you look at the Middle East, all from Maghreb, Algeria to Afghanistan and Pakistan, there is geopolitical tension that could have economic consequences.”

Roubini : The Easy Money Policy of the Federal Reserve will continue for as far as the eye can see

Nouriel Roubini : The Easy Money Policy of the Federal Reserve will continue for as far as the eye can see , "When you look at the [mixed] economic data, there's a gap between the fact that the markets, rightly so, are buoyant," he said, "because middle of last year central banks had done another massive round of quantitative easing." "Some of the improvement in the markets is not because growth is picking up ... certainly easy money implies asset inflation," Roubini said. - in cnbc

Nouriel Roubini : Serious Geopolitical Risks loom large

Nouriel Roubini : ....serious geopolitical risks loom large. The entire greater Middle East – from the Maghreb to Afghanistan and Pakistan – is socially, economically, and politically unstable. Indeed, the Arab Spring is turning into an Arab Winter. While an outright military conflict between Israel and the US on one side and Iran on the other side remains unlikely, it is clear that negotiations and sanctions will not induce Iran’s leaders to abandon efforts to develop nuclear weapons. With Israel refusing to accept a nuclear-armed Iran, and its patience wearing thin, the drums of actual war will beat harder. The fear premium in oil markets may significantly rise and increase oil prices by 20%, leading to negative growth effects in the US, Europe, Japan, China, India and all other advanced economies and emerging markets that are net oil importers.

Read more at http://www.project-syndicate.org/commentary/the-global-economy-s-rising-risks-in-2013-by-nouriel-roubini#rJDKKZK7COBU94GG.99

Roubini : Financial conditions in the eurozone have significantly improved since the summer

Nouriel Roubini : Financial conditions in the eurozone have significantly improved since the summer, when eurozone risks peaked because of German policymakers’ open consideration of a Greek exit, and the sovereign spreads of Italy and Spain reached new heights. The day before European Central Bank President Mario Draghi’s famous speech in London in which he announced that the ECB would do “whatever it takes” to save the euro, bond yields in Spain and Italy were at 7.75 percent and 6.75 percent, respectively, and rising. When the ECB announced its outright monetary transactions (OMT) bond-buying program, the euro zone was at risk of a collapse.......- excerpt from economic monitor article by Nouriel Roubini

Roubini : QEs will create Zombie Banks

"Over time, you get zombie banking, zombie corporates, zombie households, which is damaging in the long term," Nouriel Roubini At a lively debate in Davos 2013.

Roubini : In China The Real Estate Bust will accelerate by the second half

Nouriel Roubini : ....China has had to rely on another round of monetary, fiscal, and credit stimulus to prop up an unbalanced and unsustainable growth model based on excessive exports and fixed investment, high saving, and low consumption. By the second half of the year, the investment bust in real estate, infrastructure, and industrial capacity will accelerate. And, because the country’s new leadership—which is conservative, gradualist, and consensus-driven—is unlikely to speed up implementation of reforms needed to increase household income and reduce precautionary saving, consumption as a share of GDP will not rise fast enough to compensate. So the risk of a hard landing will rise by the end of this year. - in project syndicate

Nouriel Roubini : In The Eurozone, The Credit Crunch in the Banks of the Periphery Remains

Nouriel Roubini : " “The fundamental problems of lack of growth, continued recession, of debt sustainability, of lack of competitiveness, remain,” he said. “In the eurozone, the credit crunch in the banks of the periphery remains,” he said. “The transmission to the real economy is still broken.” - in the financial post

Roubini Due to Pay First Ever Visit to Bulgaria

Nouriel Roubini, the economist dubbed "Dr Doom" for predicting the credit crunch, will pay his first ever visit to Bulgaria later this month. At a forum in Sofia on February 26, Roubini, who runs a New York-based consultancy, will deliver a speech entitled "Growth opportunities for a small economy in the global world". The event will take place at Sheraton hotel, Sofia and is organized by pension assurance company Doverie and with the media partnership of Capital weekly and Bloomberg. The event is part of efforts by organizers at raising the engagement and capacity of the leading economists in the world with different scenarios and prospects of the global crisis, in particular the Bulgarian economy in the context of this crisis, by discussing their specific views and ideas locally. - in novinite.com