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

Roubini : Can the Pope save the Euro?

Professor Nouriel Roubini wrote in a twitter message : “The presence of His Holiness the Pope affords an opportunity to pray for divine intervention to save the euro"
Pope's presence is opportunity to pray for divine intervention to save the euro.It is now the most credible strategy
At today's EU summit the Pope offered the Catholic "tithe", 10% of all Vatican's assets & income, to save the Euro
Vatican reacts to furor against its not paying any taxes:at EU summit Pope offers 10% of Church's income 2 save Euro " he wrote in another message about the Pope and the faith of the Euro

Roubini : The Markets are Schizophrenic

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

Click here to watch the full interview>>>>>

Roubini : The Eurozone needs a real depreciation

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 : a big split in Europe at the moment

“There is definitely a big split in Europe at the moment. Europe is getting leaner and meaner, but that causes nervousness at the household level.” - Nouriel Roubini quote

Roubini : Once 2011 tax benefits expired capex totally slumped

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

Roubini : I see Oil prices from here going higher, rather than lower

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

ROUBINI : Oil the biggest threat to fragile global economy

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

Roubini : Spain looks worse than Italy

Nouriel Roubini : Indeed, in most dimensions Spain looks worse than Italy "Spanish economy: Gathering gloom" FT http://on.ft.com/GJNmvK - in a twitter message

Roubini : Gold bugs are clueless

Nouriel Roubini : Gold bugs are clueless about economic/financial history "Ben Bernanke Smashes the Gold Standard Standard" by David Frum - in a twitter message

Portugal to Follow Greece says Roubini Global Economics Arnab Das

Arnab Das of RGE Roubini 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.

Roubini : China risks a hard landing

Nouriel Roubini : "In my speech at the CDF in Beijing I argued that China risks a hard landing unless it implements rapidly reforms that increase consumption" in a twitter message

Roubini : Weibo, the Chinese Twitter, is becoming Chinas version of democracy

Nouriel Roubini : "Weibo, the Chinese version of Twitter, is becoming China's version of democracy and free press bypassing the lack of formal democracy" - in a twitter message

Roubini : China Housing Bubble deflating

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

Roubini : China to become number one Economy between 2020 & 2030

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

Roubini : next year we will have a meaningful Fiscal Drag

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 : sooner rather than later, force will have be used to stop Iran

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 : geopolitical shock in the Middle East could cause a global recession

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

Roubini : The fear premium might push oil prices significantly higher and could trigger a global recession

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

Roubini : Israel attack on Iran and the gas prices

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 : The biggest strategic threat to Russia is China

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

Roubini : Russia Oil and Economic Growth

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 Ron Paul

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 on Merrill Lynch recent good economic data

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

ROUBINI: An Attack On Iran Could Cause Oil To Spike To $200

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