Nouriel Roubini : “Abenomics is not just a monetary and fiscal stimulus,” it’s also increasing nominal wages to boost consumption, among other actions, said Roubini. “There is going to be volatility,” he said, but he does not see a crash of Japan’s stock market, yen or Japanese government bonds.
“Japan for once in 20 years could be a better story than other markets,”
Thursday, June 6, 2013
Wednesday, June 5, 2013
Roubini : After the Gold Rush
VENICE – The run-up in gold prices in recent years – from $800 per ounce in early 2009 to above $1,900 in the fall of 2011 – had all the features of a bubble. And now, like all asset-price surges that are divorced from the fundamentals of supply and demand, the gold bubble is deflating.
At the peak, gold bugs – a combination of paranoid investors and others with a fear-based political agenda – were happily predicting gold prices going to $2,000, $3,000, and even to $5,000 in a matter of years. But prices have moved mostly downward since then. In April, gold was selling for close to $1,300 per ounce – and the price is still hovering below $1400, an almost 30% drop from the 2011 high.
There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015.
First, gold prices tend to spike when there are serious economic, financial, and geopolitical risks in the global economy. During the global financial crisis, even the safety of bank deposits and government bonds was in doubt for some investors. If you worry about financial Armageddon, it is indeed metaphorically the time to stock your bunker with guns, ammunition, canned food, and gold bars.
But, even in that dire scenario, gold might be a poor investment. Indeed, at the peak of the global financial crisis in 2008 and 2009, gold prices fell sharply a few times. In an extreme credit crunch, leveraged purchases of gold cause forced sales, because any price correction triggers margin calls. As a result, gold can be very volatile – upward and downward – at the peak of a crisis.
Second, gold performs best when there is a risk of high inflation, as its popularity as a store of value increases. But, despite very aggressive monetary policy by many central banks – successive rounds of “quantitative easing” have doubled, or even tripled, the money supply in most advanced economies – global inflation is actually low and falling further.
The reason is simple: while base money is soaring, the velocity of money has collapsed, with banks hoarding the liquidity in the form of excess reserves. Ongoing private and public debt deleveraging has kept global demand growth below that of supply.
Thus, firms have little pricing power, owing to excess capacity, while workers’ bargaining power is low, owing to high unemployment. Moreover, trade unions continue to weaken, while globalization has led to cheap production of labor-intensive goods in China and other emerging markets, depressing the wages and job prospects of unskilled workers in advanced economies.
With little wage inflation, high goods inflation is unlikely. If anything, inflation is now falling further globally as commodity prices adjust downward in response to weak global growth. And gold is following the fall in actual and expected inflation.
Third, unlike other assets, gold does not provide any income. Whereas equities have dividends, bonds have coupons, and homes provide rents, gold is solely a play on capital appreciation. Now that the global economy is recovering, other assets – equities or even revived real estate – thus provide higher returns. Indeed, US and global equities have vastly outperformed gold since the sharp rise in gold prices in early 2009.
Fourth, gold prices rose sharply when real (inflation-adjusted) interest rates became increasingly negative after successive rounds of quantitative easing. The time to buy gold is when the real returns on cash and bonds are negative and falling. But the more positive outlook about the US and the global economy implies that over time the Federal Reserve and other central banks will exit from quantitative easing and zero policy rates, which means that real rates will rise, rather than fall.
Fifth, some argued that highly indebted sovereigns would push investors into gold as government bonds became more risky. But the opposite is happening now. Many of these highly indebted governments have large stocks of gold, which they may decide to dump to reduce their debts. Indeed, a report that Cyprus might sell a small fraction – some €400 million ($520 million) – of its gold reserves triggered a 13% fall in gold prices in April. Countries like Italy, which has massive gold reserves (above $130 billion), could be similarly tempted, driving down prices further.
Sixth, some extreme political conservatives, especially in the United States, hyped gold in ways that ended up being counterproductive. For this far-right fringe, gold is the only hedge against the risk posed by the government’s conspiracy to expropriate private wealth. These fanatics also believe that a return to the gold standard is inevitable as hyperinflation ensues from central banks’ “debasement” of paper money. But, given the absence of any conspiracy, falling inflation, and the inability to use gold as a currency, such arguments cannot be sustained.
A currency serves three functions, providing a means of payment, a unit of account, and a store of value. Gold may be a store of value for wealth, but it is not a means of payment; you cannot pay for your groceries with it. Nor is it a unit of account; prices of goods and services, and of financial assets, are not denominated in gold terms.
So gold remains John Maynard Keynes’s “barbarous relic,” with no intrinsic value and used mainly as a hedge against mostly irrational fear and panic. Yes, all investors should have a very modest share of gold in their portfolios as a hedge against extreme tail risks. But other real assets can provide a similar hedge, and those tail risks – while not eliminated – are certainly lower today than at the peak of the global financial crisis.
While gold prices may temporarily move higher in the next few years, they will be very volatile and will trend lower over time as the global economy mends itself. The gold rush is over.
Read more at http://www.project-syndicate.org/commentary/the-end-of-the-gold-bubble-by-nouriel-roubini#hEOedyy5C6U4Jq05.99
At the peak, gold bugs – a combination of paranoid investors and others with a fear-based political agenda – were happily predicting gold prices going to $2,000, $3,000, and even to $5,000 in a matter of years. But prices have moved mostly downward since then. In April, gold was selling for close to $1,300 per ounce – and the price is still hovering below $1400, an almost 30% drop from the 2011 high.
There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015.
First, gold prices tend to spike when there are serious economic, financial, and geopolitical risks in the global economy. During the global financial crisis, even the safety of bank deposits and government bonds was in doubt for some investors. If you worry about financial Armageddon, it is indeed metaphorically the time to stock your bunker with guns, ammunition, canned food, and gold bars.
But, even in that dire scenario, gold might be a poor investment. Indeed, at the peak of the global financial crisis in 2008 and 2009, gold prices fell sharply a few times. In an extreme credit crunch, leveraged purchases of gold cause forced sales, because any price correction triggers margin calls. As a result, gold can be very volatile – upward and downward – at the peak of a crisis.
Second, gold performs best when there is a risk of high inflation, as its popularity as a store of value increases. But, despite very aggressive monetary policy by many central banks – successive rounds of “quantitative easing” have doubled, or even tripled, the money supply in most advanced economies – global inflation is actually low and falling further.
The reason is simple: while base money is soaring, the velocity of money has collapsed, with banks hoarding the liquidity in the form of excess reserves. Ongoing private and public debt deleveraging has kept global demand growth below that of supply.
Thus, firms have little pricing power, owing to excess capacity, while workers’ bargaining power is low, owing to high unemployment. Moreover, trade unions continue to weaken, while globalization has led to cheap production of labor-intensive goods in China and other emerging markets, depressing the wages and job prospects of unskilled workers in advanced economies.
With little wage inflation, high goods inflation is unlikely. If anything, inflation is now falling further globally as commodity prices adjust downward in response to weak global growth. And gold is following the fall in actual and expected inflation.
Third, unlike other assets, gold does not provide any income. Whereas equities have dividends, bonds have coupons, and homes provide rents, gold is solely a play on capital appreciation. Now that the global economy is recovering, other assets – equities or even revived real estate – thus provide higher returns. Indeed, US and global equities have vastly outperformed gold since the sharp rise in gold prices in early 2009.
Fourth, gold prices rose sharply when real (inflation-adjusted) interest rates became increasingly negative after successive rounds of quantitative easing. The time to buy gold is when the real returns on cash and bonds are negative and falling. But the more positive outlook about the US and the global economy implies that over time the Federal Reserve and other central banks will exit from quantitative easing and zero policy rates, which means that real rates will rise, rather than fall.
Fifth, some argued that highly indebted sovereigns would push investors into gold as government bonds became more risky. But the opposite is happening now. Many of these highly indebted governments have large stocks of gold, which they may decide to dump to reduce their debts. Indeed, a report that Cyprus might sell a small fraction – some €400 million ($520 million) – of its gold reserves triggered a 13% fall in gold prices in April. Countries like Italy, which has massive gold reserves (above $130 billion), could be similarly tempted, driving down prices further.
Sixth, some extreme political conservatives, especially in the United States, hyped gold in ways that ended up being counterproductive. For this far-right fringe, gold is the only hedge against the risk posed by the government’s conspiracy to expropriate private wealth. These fanatics also believe that a return to the gold standard is inevitable as hyperinflation ensues from central banks’ “debasement” of paper money. But, given the absence of any conspiracy, falling inflation, and the inability to use gold as a currency, such arguments cannot be sustained.
A currency serves three functions, providing a means of payment, a unit of account, and a store of value. Gold may be a store of value for wealth, but it is not a means of payment; you cannot pay for your groceries with it. Nor is it a unit of account; prices of goods and services, and of financial assets, are not denominated in gold terms.
So gold remains John Maynard Keynes’s “barbarous relic,” with no intrinsic value and used mainly as a hedge against mostly irrational fear and panic. Yes, all investors should have a very modest share of gold in their portfolios as a hedge against extreme tail risks. But other real assets can provide a similar hedge, and those tail risks – while not eliminated – are certainly lower today than at the peak of the global financial crisis.
While gold prices may temporarily move higher in the next few years, they will be very volatile and will trend lower over time as the global economy mends itself. The gold rush is over.
Read more at http://www.project-syndicate.org/commentary/the-end-of-the-gold-bubble-by-nouriel-roubini#hEOedyy5C6U4Jq05.99
Tuesday, June 4, 2013
Roubini Sees Two Years of Stock Gains
"Growth is not going to pick up and inflation actually is falling," the head of Roubini Global Economics and noted "Dr. Doom" told "Closing Bell." "So the markets are worried about tapering off sooner, but I think tapering off is going to occur later and therefore the market is going to rally." "You're going to have an increasing gap between Wall Street and Main Street, between what's happening to asset prices and real economic growth," he said. The effect of the Fed helping stock prices "for now is dominant, but of course over time it cannot trump those gravitational forces of economic fundamentals."
Six reasons why the gold rush is over - Nouriel Roubini
As a Devil’s Advocate writing a contrary opinion to those who are convinced that the gold price will soon resume its upwards trajectory, Economist Nouriel Roubini has few equals. Indeed to the ardent gold believer Roubini may well be considered the Devil himself, rather than just an Advocate for the Satanic master.
In his latest opinion on gold, Roubini pulls few punches, although he does condescend at the end that the gold price will be volatile and could still temporarily move higher in the next few years. But he qualifies this in saying that the overall trend will be lower over time as the global economy mends itself. “The gold rush is over”, he says and predicts gold falling towards $1,000 by 2015. The run up in gold from $800 in early 2009 to over $1900 in 2012 “had all the features of a bubble” he says. “And now, like all asset-price surges that are divorced from the fundamentals of supply and demand, the gold bubble is deflating.”
While any number of the bullish commentators on gold take delight in publishing a number of reasons why gold will move upwards, Roubini does the opposite with his six reasons why gold will continue to fall back.
Reason No. 1: Gold prices tend to spike when there are serious economic, financial, and geopolitical risks in the global economy. But, even though this may be the case in a real and continuing financial meltdown he feels that gold would still be a poor investment with margin calls forcing sales with the result that the gold price can be extremely volatile, up and down, even at the peak of such a crisis.
Reason No. 2: Roubini notes that gold performs best when there is a risk of high inflation, as its popularity as a store of value increases, but points out that despite the huge amount of monetary easing, inflation has remained low, and may actually be falling due to the velocity of money collapsing. Commercial banks are seen as hoarding the liquidity provided by the Central banks, while reduced purchasing power and low wage demands because of high unemployment are keeping inflationary pressures down.
http://www.mineweb.com/mineweb/content/en/mineweb-gold-news?oid=192868&sn=Detail
Gold prices are heading towards $1,000
The runup in gold prices in recent years – from $800 per ounce in early 2009 to above $1,900 in the autumn of 2011 – had all the features of a bubble. Now, like all asset-price surges that are divorced from the fundamentals of supply and demand, the gold bubble is deflating.
At the peak, gold bugs – a combination of paranoid investors and others with a fear-based political agenda – were happily predicting gold prices going to $2,000, $3,000 and even to $5,000 in a matter of years. But prices have moved mostly downward since then. In April, gold was selling for close to $1,300 per ounce and the price is still hovering below $1,400, an almost 30% drop from the 2011 high.
There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015.
First, gold prices tend to spike when there are serious economic, financial and geopolitical risks in the global economy. During the global financial crisis, even the safety of bank deposits and government bonds was in doubt for some investors. If you worry about financial Armageddon, it is indeed metaphorically the time to stock your bunker with guns, ammunition, canned food and gold bars.
http://www.guardian.co.uk/business/economics-blog/2013/jun/03/gold-bubble-bursts-nouriel-roubini
At the peak, gold bugs – a combination of paranoid investors and others with a fear-based political agenda – were happily predicting gold prices going to $2,000, $3,000 and even to $5,000 in a matter of years. But prices have moved mostly downward since then. In April, gold was selling for close to $1,300 per ounce and the price is still hovering below $1,400, an almost 30% drop from the 2011 high.
There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015.
First, gold prices tend to spike when there are serious economic, financial and geopolitical risks in the global economy. During the global financial crisis, even the safety of bank deposits and government bonds was in doubt for some investors. If you worry about financial Armageddon, it is indeed metaphorically the time to stock your bunker with guns, ammunition, canned food and gold bars.
http://www.guardian.co.uk/business/economics-blog/2013/jun/03/gold-bubble-bursts-nouriel-roubini
Monday, June 3, 2013
Nouriel Roubini on why Gold prices are headed much lower
VENICE – The run-up in gold prices in recent years – from $800 per ounce
in early 2009 to above $1,900 in the fall of 2011 – had all the
features of a bubble. And now, like all asset-price surges that are
divorced from the fundamentals of supply and demand, the gold bubble is
deflating.
At the peak, gold bugs – a
combination of paranoid investors and others with a fear-based political
agenda – were happily predicting gold prices going to $2,000, $3,000,
and even to $5,000 in a matter of years. But prices have moved mostly
downward since then. In April, gold was selling for close to $1,300 per
ounce – and the price is still hovering below $1400, an almost 30% drop
from the 2011 high.
There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015.
First,
gold prices tend to spike when there are serious economic, financial,
and geopolitical risks in the global economy. During the global
financial crisis, even the safety of bank deposits and government bonds
was in doubt for some investors. If you worry about financial
Armageddon, it is indeed metaphorically the time to stock your bunker
with guns, ammunition, canned food, and gold bars.
But,
even in that dire scenario, gold might be a poor investment. Indeed, at
the peak of the global financial crisis in 2008 and 2009, gold prices
fell sharply a few times. In an extreme credit crunch, leveraged
purchases of gold cause forced sales, because any price correction
triggers margin calls. As a result, gold can be very volatile – upward
and downward – at the peak of a crisis.
Second,
gold performs best when there is a risk of high inflation, as its
popularity as a store of value increases. But, despite very aggressive
monetary policy by many central banks – successive rounds of
“quantitative easing” have doubled, or even tripled, the money supply in
most advanced economies – global inflation is actually low and falling
further.
Sunday, June 2, 2013
Nouriel Roubini : Art is a new major Asset Class
Nouriel Roubini :
From the Venice Art Biennal it looks like art is indeed a new major asset class. It may be in a bubble as a frenzy of new collectors emerges - in twitter
Saturday, June 1, 2013
Nouriel Roubini | After the Gold Rush
Venice: The run-up in gold prices in recent
years—from $800 per ounce in early 2009 to above $1,900 in the fall of
2011—had all the features of a bubble. And now, like all asset-price
surges that are divorced from the fundamentals of supply and demand, the
gold bubble is deflating.
At the peak, gold bugs—a combination of paranoid
investors and others with a fear-based political agenda—were happily
predicting gold prices going to $2,000, $3,000, and even to $5,000 in a
matter of years. But prices have moved mostly downward since then. In
April, gold was selling for close to $1,300 per ounce—and the price is
still hovering below $1400, an almost 30% drop from the 2011 high.
There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015.
First, gold prices tend to spike when there are serious
economic, financial, and geopolitical risks in the global economy.
During the global financial crisis, even the safety of bank deposits and
government bonds was in doubt for some investors. If you worry about
financial Armageddon, it is indeed metaphorically the time to stock your
bunker with guns, ammunition, canned food, and gold bars.
But, even in that dire scenario, gold might be a poor
investment. Indeed, at the peak of the global financial crisis in 2008
and 2009, gold prices fell sharply a few times. In an extreme credit
crunch, leveraged purchases of gold cause forced sales, because any
price correction triggers margin calls. As a result, gold can be very
volatile—upward and downward—at the peak of a crisis.
Friday, May 31, 2013
Nouriel Roubini : The Fed is creating massive Fraud
Nouriel Roubini : "They [The Fed] are creating massive fraud," Roubini said during a panel at the
Milken Institute Global Conference in Beverly Hills, Calif., last week.
He pointed to the junk bond market as one example of a bubble.
"At some point, there's a levitational problem," said Roubini. When gravity sets in, Roubini says there will not be a recession but a depression.
"The global growth scare would imply that commodity prices should be lower, bond yields should be lower, and equities should be lower," he said.
He pointed to the junk bond market as one example of a bubble.
"At some point, there's a levitational problem," said Roubini. When gravity sets in, Roubini says there will not be a recession but a depression.
"The global growth scare would imply that commodity prices should be lower, bond yields should be lower, and equities should be lower," he said.
Thursday, May 30, 2013
Roubini On Quantitative Easing & Asset Bubbles
It is hard to predict bubbles and their bursts, but I would say that we are having tension in the US and the global economy. On one side, growth is weak in advanced economies and unemployment rate is high and that justifies more quantitative easing. Existing quantitative easing and zero policy rate very slowly will try and support recovery but on the other side, a lot of this liquidity is not creating credit for the real economy and is going into asset prices, greater risk taking and greater leveraging into the financial system.
There is already frothiness in the asset market in the US and over time low rates are going to cause credit, asset and equity bubbles which may become dangerous. Not today, but certainly three to four years of zero policy rates will lead to that. There could be a repeat of the cycle which we had seen between 2004 and 2008 when real economy weakness justified keeping rates low for longer and exiting from those low rates slower, but that attempt to stabilize the real economy created financial instability and frothiness that led to a bubble which eventually busted. - in livemint
There is already frothiness in the asset market in the US and over time low rates are going to cause credit, asset and equity bubbles which may become dangerous. Not today, but certainly three to four years of zero policy rates will lead to that. There could be a repeat of the cycle which we had seen between 2004 and 2008 when real economy weakness justified keeping rates low for longer and exiting from those low rates slower, but that attempt to stabilize the real economy created financial instability and frothiness that led to a bubble which eventually busted. - in livemint
Wednesday, May 29, 2013
Italy Trip Report: A Fragile Economic and Political Environment
Nouriel Roubini :
My new paper with RGE's Brunello Rosa - Italy Trip Report: A Fragile Economic and Political Environment http://bit.ly/10zvTAR $$ - in twitter
Tuesday, May 28, 2013
Roubini shuts India Centre
NEW DELHI: Renowned US economist Nouriel Roubini, who has been referred to as "Dr Doom" for predicting the 2008 financial crisis, has downed the shutters on his India centre nearly two years after setting up shop in Asia's third-largest economy.
Roubini had chosen India as one of his key centres for economic research and analysis. This is his third centre after New York and London. The centre, which began operations in July 2011, was closed down a few months ago, sources said.
Nearly 10 staffers, including economists, were asked to leave and were given the statutory three-month notice, sources said. They said the company, which is widely regarded for its top-notch economic research and analysis, failed to penetrate the Indian market.
TOI sent a detailed questionnaire to Richard Green, CEO of Roubini Global Economics, asking him about the closure of the India centre. Green sent a short reply saying the firm remained committed to India and Asia. "We remain very committed to India and the wider Asian marketplace, but I'm afraid we are a private company and we don't comment on our internal and external strategy," Green told TOI in an email.
- in http://timesofindia.indiatimes.com/business/india-business/2-years-on-Dr-Doom-shuts-India-centre/articleshow/20282312.cms
Roubini had chosen India as one of his key centres for economic research and analysis. This is his third centre after New York and London. The centre, which began operations in July 2011, was closed down a few months ago, sources said.
Nearly 10 staffers, including economists, were asked to leave and were given the statutory three-month notice, sources said. They said the company, which is widely regarded for its top-notch economic research and analysis, failed to penetrate the Indian market.
TOI sent a detailed questionnaire to Richard Green, CEO of Roubini Global Economics, asking him about the closure of the India centre. Green sent a short reply saying the firm remained committed to India and Asia. "We remain very committed to India and the wider Asian marketplace, but I'm afraid we are a private company and we don't comment on our internal and external strategy," Green told TOI in an email.
- in http://timesofindia.indiatimes.com/business/india-business/2-years-on-Dr-Doom-shuts-India-centre/articleshow/20282312.cms
Monday, May 27, 2013
Roubini : France is slipping into a Recession that complicates the Austerity & Reform Agenda
Nouriel Roubini :
I am in Paris for policy meetings & a policy conference. France is slipping into a recession that complicates the austerity & reform agenda - in twitter
Sunday, May 26, 2013
Roubini :Spain is the real nightmare Domino
But the real nightmare domino is Spain. Roubini refers to the Spanish debt problems as "the elephant in the room".
"You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line."
"But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side—and also too big to be bailed out."
"You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line."
"But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side—and also too big to be bailed out."
Saturday, May 25, 2013
Nouriel Roubini Perfect Storm Coming for Global Economy in 2013
Roubini : The perfect storm is not my baseline scenario. My baseline scenario is one of low economic growth in advanced economies and recession in some of them, like the euro zone, like the U.K., like Japan but not recession in the U.S., slower economic growth in emerging markets; that’s the baseline. But there could be a situation in which you could have a perfect storm that would happen if there is a fiscal cliff in the United States that tips the US into a recession, if the euro zone crisis gets worse and there is an exit of Greece that is disorderly, if the landing of China becomes a hard landing of China, and four, if we really had a war in the Middle East between Israel and Iran and oil prices go to $200/barrel
Friday, May 24, 2013
A Conversation with Professor Nouriel Roubini and Google's Eric Schmidt and Jared Cohen
On Monday, May 6, Professor Nouriel Roubini talked with Eric Schmidt, executive chairman of Google, and Jared Cohen, director of Google Ideas about their new book, "The New Digital Age: Reshaping the Future of People, Nations and Business."
Thursday, May 23, 2013
Nouriel Roubini : UK Economy still Fragile
Nouriel Roubini :
I am in London for business meetings. UK economy still fragile as there's barely any positive growth & EU Brixit saga creates uncertainty - in twitter
Wednesday, May 22, 2013
Nouriel Roubini : Five Growth triggers for Indian Economy
Confident About India's Growth Model : Roubini
ET takes a look at five economic aspects of India that Roubini spoke
on, the challenges that the country faces and the solution to its
structural problems.
India versus China:
Speaking to ET he said, "India has a significant trade imbalance with China in goods especially and that demand can become a problem. India cannot afford to have an early demise of its manufacturing. The risk is that cheap and good quality Chinese goods are going to crowd out Indian manufactured sector."
IT revolution:
He said that India has used the export of Information Technology services to increase trade with many countries. "Absorption and innovation of new technologies play an important role in growth of economy. The digital revolution implies that new technologies can be transferred much faster from country to country," Roubini said.
Since global growth in services can only grow, India, said Prof Roubini, could have a long-term advantage, with services like IT services, financial services, medical or vocational services becoming more tradable. For this, India, he advised, needs to invest in human capital and skills to make sure it keeps its competitive advantage.
Roubini marked out that innovations in IT will boost productivity and will help the global economy. Web 2.0, Web 3.0, cloud computing, automation and social media will help in raising productivity.
Indian recovery:
"Recovery of growth in India driven by easier monetary policy that has occurred in the last few months and the fall in the commodity prices is going to reduce gradually inflation. In a way, it is going to boost purchasing power and allow further monetary easing by the Reserve Bank," Roubini said.
However, Roubini highlighted the negative aspects of global growth slowdown stating, "China is slowing down, advanced economies are slowing down and while India is not just dependent on trade as China is. The global economic climate affects confidence. So India already starts from a situation where growth has been disappointing last year and global growth was supposed to accelerate. If instead of accelerating it slows down further in China, in US, in Europe, that on net is going to be a negative on Indian growth," he said.
Reforms:
"Structural reforms and liberalisation that have occurred in India in last few years have happened at a slower than optimal and desirable pace." "That is one of the reasons why economic growth in India for last couple of years has been disappointing. The government is trying to jumpstart some reforms," he acknowledged.
But, he highlighted that India will have general elections next year. "This implies political and policy uncertainty, it might also imply that in a coalition government, it is going to be harder to accelerate policy reforms that have resistance among some social and political groups," he said.
India versus China:
Speaking to ET he said, "India has a significant trade imbalance with China in goods especially and that demand can become a problem. India cannot afford to have an early demise of its manufacturing. The risk is that cheap and good quality Chinese goods are going to crowd out Indian manufactured sector."
IT revolution:
He said that India has used the export of Information Technology services to increase trade with many countries. "Absorption and innovation of new technologies play an important role in growth of economy. The digital revolution implies that new technologies can be transferred much faster from country to country," Roubini said.
Since global growth in services can only grow, India, said Prof Roubini, could have a long-term advantage, with services like IT services, financial services, medical or vocational services becoming more tradable. For this, India, he advised, needs to invest in human capital and skills to make sure it keeps its competitive advantage.
Roubini marked out that innovations in IT will boost productivity and will help the global economy. Web 2.0, Web 3.0, cloud computing, automation and social media will help in raising productivity.
Indian recovery:
"Recovery of growth in India driven by easier monetary policy that has occurred in the last few months and the fall in the commodity prices is going to reduce gradually inflation. In a way, it is going to boost purchasing power and allow further monetary easing by the Reserve Bank," Roubini said.
However, Roubini highlighted the negative aspects of global growth slowdown stating, "China is slowing down, advanced economies are slowing down and while India is not just dependent on trade as China is. The global economic climate affects confidence. So India already starts from a situation where growth has been disappointing last year and global growth was supposed to accelerate. If instead of accelerating it slows down further in China, in US, in Europe, that on net is going to be a negative on Indian growth," he said.
Reforms:
"Structural reforms and liberalisation that have occurred in India in last few years have happened at a slower than optimal and desirable pace." "That is one of the reasons why economic growth in India for last couple of years has been disappointing. The government is trying to jumpstart some reforms," he acknowledged.
But, he highlighted that India will have general elections next year. "This implies political and policy uncertainty, it might also imply that in a coalition government, it is going to be harder to accelerate policy reforms that have resistance among some social and political groups," he said.
"The pace of liberalisation until the election is going to be only
modest at best and that implies that potential growth is now going to be
accelerating significantly and that political and policy uncertainty,
regulatory uncertainty, taxation uncertainty is not ideal for the
business climate and is going to keep private investment in real capital
spending slower growing than would otherwise be," he added.
RBI rate cuts:
As the world looks more and more unpredictable, India should cut interest rates. "There may be room for soft policies...In my view, in the next 12 months, there may be room for another 50 basis points cut."
Over the next 12 months, he expected the Reserve Bank of India to continue with its soft monetary policy and cut key policy rates by another half a percentage points. Given India's high current account deficit, which could widen with rate cuts and due to the central bank's growth-versus-inflation dilemma, Prof Roubini feels weakening global economy and softer commodity prices could counter a possible threat of rate cuts weakening the currency and feeding inflation.
RBI rate cuts:
As the world looks more and more unpredictable, India should cut interest rates. "There may be room for soft policies...In my view, in the next 12 months, there may be room for another 50 basis points cut."
Over the next 12 months, he expected the Reserve Bank of India to continue with its soft monetary policy and cut key policy rates by another half a percentage points. Given India's high current account deficit, which could widen with rate cuts and due to the central bank's growth-versus-inflation dilemma, Prof Roubini feels weakening global economy and softer commodity prices could counter a possible threat of rate cuts weakening the currency and feeding inflation.
Roubini 70 chance of Greek Eurozone Exit
Prof. Roubini 70 chance of Greek eurozone exit : Professor Nouriel Roubini from Stern School of Business talks exclusively to RT and says that aby next year there is at least a 23 probability that Greece will exit the eurozonea.
Tuesday, May 21, 2013
ROUBINI: The Market Rally could Go On For Another Year Or Two
Nouriel Roubini : It could go on for another year or two.
Of course, there are two forces. Growth is slow. Earnings growth is also slowing down. Top line and bottom line are not as good as they used to be, but margins are high. They could correct, somehow, over time.
But you have the gravitational forces of slow economy leading eventually to correction, but then the levitational forces of QEs, zero policy rates, more money coming in the market – not just from the U.S., but from other economies – it’s going to levitate asset prices.
So, as I pointed out, this might lead to a generalized credit and equity and asset bubble in the next year or two, followed by a crash.
Bu for the next year or so, as long as the economy grows 1.5-2%, and you have easy money, this market can go higher. - in Business Inside Australia
Of course, there are two forces. Growth is slow. Earnings growth is also slowing down. Top line and bottom line are not as good as they used to be, but margins are high. They could correct, somehow, over time.
But you have the gravitational forces of slow economy leading eventually to correction, but then the levitational forces of QEs, zero policy rates, more money coming in the market – not just from the U.S., but from other economies – it’s going to levitate asset prices.
So, as I pointed out, this might lead to a generalized credit and equity and asset bubble in the next year or two, followed by a crash.
Bu for the next year or so, as long as the economy grows 1.5-2%, and you have easy money, this market can go higher. - in Business Inside Australia
Monday, May 20, 2013
Italy : Critical To Implement Policies To Restart Growth
Nouriel Roubini : "With a new government in place and ongoing recession it is critical to implement policies to restart growth." - in Twitter
Roubini : Inflation in Russia could reach double digits
Economist Nouriel Roubini who is attending Russia Forum says inflation in Russia could reach double digits this year a and that the government needs to push forward with reforms to tackle the problem.
Sunday, May 19, 2013
Roubini Confident About India's Growth Model
"Recovery of growth in India driven by easier monetary policy that has occurred in the last few months and the fall in the commodity prices is going to reduce gradually inflation. In a way, it is going to boost purchasing power and allow further monetary easing by the Reserve Bank," Roubini said.
However, Roubini highlighted the negative aspects of global growth slowdown stating, "China is slowing down, advanced economies are slowing down and while India is not just dependent on trade as China is. The global economic climate affects confidence. So India already starts from a situation where growth has been disappointing last year and global growth was supposed to accelerate. If instead of accelerating it slows down further in China, in US, in Europe, that on net is going to be a negative on Indian growth," he said.
Saturday, May 18, 2013
Roubini : The Too Big to Fail has only become more true since 2008
Roubini on why the Federal Reserve keeps issuing quantitative easing:
"We're in the process of very painful deleveraging in advanced economies. We started the crisis with too much private debt and now we have too much public debt and deficits. Research suggests that usually a deleveraging cycle can last up to a decade. The crisis in 2007, now we are in 2012 and therefore the process of deleveraging in the United States, in the euro zone, in the U.K. and Japan is barely mid-stream. In the U.S. we postponed the deleveraging of the public sector and the housing sector, and therefore, economic growth will is anemic. Therefore, the only thing we can do, given we don't have the fiscal tool, is use the monetary policy."
Bremmer on what is needed in Washington to get something done:
"You don't get there until after the elections and you shouldn't, because whether or not Obama is able to take this, the actual outcome, the way that you have Senate and House laid out, that actually matters in terms of the ultimate deal you get. So if you're a Democrat or Republican right now, you have zero incentive to tip your hand on what you really want to do until you know where we're going to go. As soon as we get past those election, a deal is going to happen."
Roubini on whether Bernanke is an asset or liability for President Obama:
"At the margin, he's an asset in a sense of what the Fed has been doing is reduce the tail risk of another double dip recession. QE, QE2, Operation Twist and now QE 3. It is not going to have a huge effect on the economy, but it already has an effect on stock prices. There has been a rally of 15% since December in part because of lower tail risk in the euro zone and in part because of QE3. The margin is beneficial, but only marginally."
Bremmer on November's election:
"If Obama wins, and it is looking very much like he is going to, it's not primarily because Romney is a horrible candidate. It is primarily because of three people. It's John Roberts and the fact that he got healthcare approved. It's Angela Merkel and the fact of the chancellor has been able to keep the euro zone afloat...And number 3, Ben Bernanke. You would not expect these three people President Obama would win with."
Roubini on the banking system in the U.S.:
"It is worse than before, because there has been massive consolidation of the banking system in the United States, JPMorgan took over Bear Stearns. Bank of America took over Countrywide and Merrill Lynch. We had banks that were too big to fail before the crisis and now they are even bigger to fail than before. There has been mass consolidation. The problem has not gone away. The only solution is to break up too big to fail banks. There is no other alternative. We have to go back to Glass-Steagall."
Roubini on what would be the catalyst to break up the banks:
"I would have thought after the worst global financial crisis the decision would have been made. Maybe we need another big financial crisis. For the time being, the politics will not lead us there."
Bremmer on where the leadership will come from to get to a better financial system:
"It will not come soon. What you're really talking about when you talk about too big to fail is the United States. We are too big to fail that has only become more true since 2008. It is the reason why people continue to put more money in our equities and our treasuries."
Roubini on the economic outlook of Germany:
"There was a divergence between economic growth of the core and the peripheral of the euro zone. Germany used to do better, but the latest data suggests a slowdown in German economic growth. It is still positive, but there are two shocks. There are two main markets for exports, China and Asia, are slowing down. Secondly, the recession of the periphery of the euro zone is taking a toll because after all, most of the exports of Germany go to the rest of the euro zone. There is a significant slowdown of growth, even in Germany."
Friday, May 17, 2013
Nouriel Roubini:The Dangers Associated with State Capitalism
Free Market vs state capitalism , An analysis of an emerging economic model. | An analysis of emerging economic model.
Thursday, May 16, 2013
Limits of Monetary Policy and Stimulus - Low growth is unavoidable
Nouriel Roubini is founder of Roubini Global Economics.
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of Roubini Global Economics
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of Roubini Global Economics
Wednesday, May 15, 2013
Will Chinas Rise lead to the End of Capitalism?
China's rise and the fall of capitalism
Will China's rise lead to the end of capitalism? Will armies of robots replace the world's workforce? And will China be able to block Facebook and Google forever? Risk expert Ian Bremmer and Dr. Doom, Nouriel Roubini give their 2013 predictions for politics and the economy to Reuters Digital Editor Chrystia Freeland. (January 14, 2013)
Will China's rise lead to the end of capitalism? Will armies of robots replace the world's workforce? And will China be able to block Facebook and Google forever? Risk expert Ian Bremmer and Dr. Doom, Nouriel Roubini give their 2013 predictions for politics and the economy to Reuters Digital Editor Chrystia Freeland. (January 14, 2013)
Tuesday, May 14, 2013
Roubini : Falling Commodity Prices is a signal that the markets are getting worried again about Global Economic Growth
Zee Business News@ 7 24 April 2013 02min 51sec Mr Nouriel Roubini - Chmn, Roubini Global Econ
Nouriel Roubini : Falling Commodity Prices is a signal that the markets are getting worried again about global economic growth
Nouriel Roubini : Falling Commodity Prices is a signal that the markets are getting worried again about global economic growth
Monday, May 13, 2013
Nouriel Roubini Interview with ET Now Trading Calls 25 April 2013
ET Now Trading Calls 25 April 2013 - Mr Nouriel Roubini - Roubini Global Economics
India versus China:
Speaking to ET he said, "India has a significant trade imbalance with China in goods especially and that demand can become a problem. India cannot afford to have an early demise of its manufacturing. The risk is that cheap and good quality Chinese goods are going to crowd out Indian manufactured sector."
IT revolution:
He said that India has used the export of Information Technology services to increase trade with many countries. "Absorption and innovation of new technologies play an important role in growth of economy. The digital revolution implies that new technologies can be transferred much faster from country to country," Roubini said.
Since global growth in services can only grow, India, said Prof Roubini, could have a long-term advantage, with services like IT services, financial services, medical or vocational services becoming more tradable. For this, India, he advised, needs to invest in human capital and skills to make sure it keeps its competitive advantage.
Roubini marked out that innovations in IT will boost productivity and will help the global economy. Web 2.0, Web 3.0, cloud computing, automation and social media will help in raising productivity.
India versus China:
Speaking to ET he said, "India has a significant trade imbalance with China in goods especially and that demand can become a problem. India cannot afford to have an early demise of its manufacturing. The risk is that cheap and good quality Chinese goods are going to crowd out Indian manufactured sector."
IT revolution:
He said that India has used the export of Information Technology services to increase trade with many countries. "Absorption and innovation of new technologies play an important role in growth of economy. The digital revolution implies that new technologies can be transferred much faster from country to country," Roubini said.
Since global growth in services can only grow, India, said Prof Roubini, could have a long-term advantage, with services like IT services, financial services, medical or vocational services becoming more tradable. For this, India, he advised, needs to invest in human capital and skills to make sure it keeps its competitive advantage.
Roubini marked out that innovations in IT will boost productivity and will help the global economy. Web 2.0, Web 3.0, cloud computing, automation and social media will help in raising productivity.
Sunday, May 12, 2013
Nouriel Roubini Speech @ ET Now Business Day 24 April 2013
Business Day | Apr 24, 2013 ET NOW : Business Day Business Day on ET Now brings you in-depth updates on the key events and developments in the stock market. This show scrutinizes the day's happenings and their relevance on the stock market in detail. Even a by-election in a remote State can cause a change in the stock market behaviour. So, to find out more such interesting news items and their effect on the market, tune into Business Day, only on ET Now.
Saturday, May 11, 2013
Roubini : look out for a Big Market Crash
Stocks aren't in bubble territory as yet, but a "huge rally in risk assets" over the next two years puts markets in danger of a big crash, renowned economist Nouriel Roubini said on Tuesday. Roubini added that there is a "huge gap between sentiment on Wall Street and the main street," and the real U.S. economy remains weak.His comments, made at a private dinner event in Las Vegas - according to CNBC
Why Roubini likes Stocks, for now
....The U.S. economy isn't accelerating. European countries are either stuck in recessions or depressions. China, Brazil, and other emerging market economies are slowing. What's more, corporate profit margins are at an all-time high. Roubini said that is likely to revert to normal soon, taking bottom lines down with it.Markets look happy, but what is going on in the general economy is not," says Roubini. "We are stuck in a two-year boom and bust cycle. That's what I am most worried about." - in CNN money
Nouriel Roubini, Cofounder & Chairman, Roubini Global Economics Interview with Newsasia Channel
Nouriel Roubini talks on Wall Street's gains, clearly driven by the excess liquidity in the market, but he's not too worried yet.
Friday, May 10, 2013
Spreads are so low in Germany
"Spreads are so low in Germany that if they were to do a fiscal stimulus... I don't think they would lose any credibility," he said.
"I am talking about a short-term fiscal programme to boost economic growth."
Countries that are undertaking structural reforms such as laying off staff in the civil service as part of measures to get their public finances under control should be allowed higher budget deficits than stipulated under the European Union rules for a short period of time, he argued.
"There has to be a trade-off that if a country does structural reforms, you have to give them more fiscal flexibility," Roubini said. - in emergingmarkets.org
Roubini : In the Eurozone we have an outright Recession, and that is not going away
In the eurozone "we have an outright recession, and that is not going away," Roubini, who was dubbed "Dr. Doom" by the media and by market participants because of his pessimistic outlook on the economy at the onset of the financial crisis, said.He pointed out that if gross domestic product keeps falling, the ratio of debt to GDP will keep on rising: "it's leading to the situation getting worse rather than getting better." - in emergingmarkets.org
Thursday, May 9, 2013
ROUBINI: The Market Rally could go on for another year or two
Nouriel Roubini : "It could go on for another year or two. Of course, there are two forces. Growth is slow. Earnings growth is also slowing down. Top line and bottom line are not as good as they used to be, but margins are high. They could correct, somehow, over time.
But you have the gravitational forces of slow economy leading eventually to correction, but then the levitational forces of QEs, zero policy rates, more money coming in the market – not just from the U.S., but from other economies – it's going to levitate asset prices.
So, as I pointed out, this might lead to a generalized credit and equity and asset bubble in the next year or two, followed by a crash. But for the next year or so, as long as the economy grows 1.5-2 percent, and you have easy money, this market can go higher. "- in Business Insider
Wednesday, May 8, 2013
Roubini: Fed Risking Sequel to 2008 Financial Crisis
The Federal Reserve's commitment to loose monetary policy is likely to lead to asset and equity bubbles in the next two years which could be worse than the previous crisis, renowned economist Nouriel Roubini said in an opinion piece for Project Syndicate. "The issuance of risky junk bonds under loose covenants and with excessively low interest rates is increasing; the stock market is reaching new highs, despite the growth slowdown; and money is flowing to high-yielding emerging markets," he added.
Roubini: No Stock Bubble, but 'Huge' Crash Could Come Later
Stocks aren't in bubble territory as yet, but a "huge rally in risk assets" over the next two years puts markets in danger of a big crash, Nouriel Roubini told CNBC on Tuesday, there is a "huge gap between sentiment on Wall Street and the main street," and the real U.S. economy remains weak he added .
Tuesday, May 7, 2013
Roubini : The Euro Crisis could be worse than Lehman Collapse
Nouriel Roubini chairman of financial analysis firm Roubini Global Economics warns that Eurozone debt problems could create greater shocks than the 2008 global financial crisis.
Monday, May 6, 2013
Roubini : Spain is too big to fail, and too big to be bailed out
Nouriel Roubini : "You can try to ring fence Spain. And you can essentially try to provide financing officially to Ireland, Portugal, and Greece for three years. Leave them out of the market. Maybe restructure their debt down the line."
"But if Spain falls off the cliff, there is not enough official money in this envelope of European resources to bail out Spain. Spain is too big to fail on one side—and also too big to be bailed out." - in a recent interview with CNBC
Roubini : It may be too soon to say that many risky Assets have reached Bubble levels
Nouriel Roubini : ....It may be too soon to say that many risky assets have reached bubble levels, and that leverage and risk-taking in financial markets is becoming excessive. But the reality is that credit and asset/equity bubbles are likely to form in the next two years, owing to loose US monetary policy. The Fed has signaled that QE3 will continue until the labor market has improved sufficiently (likely in early 2014), with the interest rate at 0% until unemployment has fallen at least to 6.5% (most likely no earlier than the beginning of 2015).
Even when the Fed starts to raise interest rates (some time in 2015), it will proceed slowly. In the previous tightening cycle, which began in 2004, it took the Fed two years to normalize the policy rate. This time, the unemployment rate and household and government debt are much higher. Rapid normalization – like that undertaken in the space of a year in 1994 – would crash asset markets and risk leading to a hard economic landing. - in www.project-syndicate.org
Even when the Fed starts to raise interest rates (some time in 2015), it will proceed slowly. In the previous tightening cycle, which began in 2004, it took the Fed two years to normalize the policy rate. This time, the unemployment rate and household and government debt are much higher. Rapid normalization – like that undertaken in the space of a year in 1994 – would crash asset markets and risk leading to a hard economic landing. - in www.project-syndicate.org
Sunday, May 5, 2013
Nouriel Roubini : In Europe Only German looks somewhat immune
Nouriel Roubini : Europe remains the biggest threat or so-called tail risk , it has become clear that the recession has moved from what's
considered peripheral Europe or Spain, Italy, Portugal, and Ireland and
into the core Europe. Only Germany, he said, looks somewhat immune.
Investors might want to ride the bubble higher. "In the short-term, it's great for assets."- in CNN Money
Investors might want to ride the bubble higher. "In the short-term, it's great for assets."- in CNN Money
Roubini : The Fed is creating the same problems that led to the financial crisis in 2008
Nouriel Roubini : The Fed is creating the same problems that led to the financial crisis in 2008 by keeping rates near zero. "They are creating massive fraud," Roubini said during a panel at the Milken Institute Global Conference in Los Angeles, Calif. Monday.
He pointed to the junk bond market as one example of a bubble.
"At some point, there's a levitational problem," said Roubini.
When gravity sets in, Roubini says there will not be a recession but a depression.
With slowing global growth, it's impossible to keep stocks and bonds at these valuations. "The global growth scare would imply that commodity prices should be lower, bond yields should be lower, and equities should be lower," - in CNN Money
Saturday, May 4, 2013
Roubini : Eurozone Recession spreading to the core: first France, now Belgium
Nouriel Roubini :
EZ recession spreading to the core: first France, now Belgium @fiatcurrency: *BELGIAN ECONOMY CONTRACTS 0.5% IN 1Q FROM YEAR-EARLIER QUARTER - in twitter
Friday, May 3, 2013
Roubini Is Bullish on Stocks
Roubini is predicting an uptick in stock prices over the next two years
as the Federal Reserve continues its stimulus efforts. But buyer beware,
Dr. Doom says, because a day of reckoning is lurking at the end of the
two-year horizon.
The Fed, he said, is creating the same problems that led to the financial crisis in 2008 by keeping rates near zero. "They are creating massive fraud," Roubini said during a panel at the Milken Institute Global Conference in Los Angeles, Calif. Monday.
He pointed to the junk bond market as one example of a bubble.
"At some point, there's a levitational problem," said Roubini.
When gravity sets in, Roubini says there will not be a recession but a depression.
With slowing global growth, it's impossible to keep stocks and bonds at these valuations. "The global growth scare would imply that commodity prices should be lower, bond yields should be lower, and equities should be lower," he said.- in CNN Money
The Fed, he said, is creating the same problems that led to the financial crisis in 2008 by keeping rates near zero. "They are creating massive fraud," Roubini said during a panel at the Milken Institute Global Conference in Los Angeles, Calif. Monday.
He pointed to the junk bond market as one example of a bubble.
"At some point, there's a levitational problem," said Roubini.
When gravity sets in, Roubini says there will not be a recession but a depression.
With slowing global growth, it's impossible to keep stocks and bonds at these valuations. "The global growth scare would imply that commodity prices should be lower, bond yields should be lower, and equities should be lower," he said.- in CNN Money
Roubini: QE is Building a Bubble
Nouriel Roubini : “The problem is that the Fed’s liquidity injections are not creating credit for the real economy, but rather boosting leverage and risk taking in financial markets,”The Fed has said will keep rates low until unemployment reaches 6.5%. When it finally does start raising rates, it will surely raise them slowly, and probably not before Y 2015. If it moves too fast, it will crash asset markets and prompt a hard landing,“But if financial markets are already frothy now,” “consider how frothy they will be in Y 2015, when the Fed starts tightening, and in Y 2017 if not later, when the Fed finishes tightening.”
Thursday, May 2, 2013
Roubini : Russia needs structural reforms to cut Inflation
Economist Nouriel Roubini whoas attending Russia Forum 2011 says
inflation in Russia could reach double digits this year a and that the
government needs to push forward with reforms to tackle the problem.
Wednesday, May 1, 2013
Roubini: The shale gas revolution could become a game changer
Nouriel Roubini: Certainly. The shale gas revolution
could become a game changer. The US will be able to exploit the reserves
much faster than other countries because of less environmental concerns
and expertise availability. Supply of oil and gas can increase over
time relative to the demand. But the increase in demand is going to
remain robust. Emerging markets are growing fast and there is
urbanisation, industrialisation, population growth and per capita income
growth. The wild card in energy remains a geopolitical risk. If there
was a conflict between, say, Israel and Iran on the issue of nuclear
proliferation, the fuel premium will rise. That will spike oil prices.
Historically geopolitical shocks in the Middle East have been sources of
a sharp rise in the fuel premium and the prices of oil. So, that is a
risk which has to be considered.
Roubini : Fall in commodity prices is a signal that investors in financial markets are worried about the global economic growth
Nouriel Roubini : Fall in commodity prices is a signal that investors in financial markets are worried about the global economic growth. It certainly is a growth scare, but this growth scare could be more significant. The latest economic data suggests continued recession in the periphery of the Eurozone. US growth is slowing down sharply because of the weakness in the core of the Eurozone (recession in France, a slowdown in Germany), and the affects of fiscal drag in the US between tax increases and Spanish sequesters. There has been deflation in Japan and we do not know whether Abenomics is going to succeed. The United Kingdom is on the verge of a triple dip recession. Until recently at least emerging markets were going stronger but now the latest economic data from China suggests a slowdown. A similar slowdown has occurred in other BRIC countries. Economic growth in India, Russia, Brazil and South Africa has been disappointing.
So, while lower commodity prices could look beneficial for countries that are importing oil, energy, food and raw materials, however, if the reason behind the sharp fall of commodity prices is more than a growth scare, then the affects of that slowdown on India are more important than the benefits of lower commodity prices. If the fall in commodity prices is the result of a weakness in global economic growth, then it is on net a negative for commodity importing countries like India.
Tuesday, April 30, 2013
Roubini : Growth in Emerging Markets Positive for Global Economy
Roubini Global Economics Chairman Nouriel Roubini today spoke about geopolitical risks in the global economy, providing a vision for 2020, at the Plenary Session of the 44th General Assembly of the WTCA, New York. Roubini : US economic growth is being supported by an easing in the monetary policy. The US Federal Reserve is expected to continue quantitative easing for another year and have zero policy rates for two years. Roubini also said the US has no plan for medium-term fiscal sustainability. Referring to China, he said that the country may experience a slowdown and have a “hard landing” next year since savings are high, but consumption is low. - in ET Now
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