China will maintain an annual Growth Rate above 7% in 2014

China will maintain an annual growth rate above 7% in 2014. But, despite the reforms set out by the Third Plenum of the Communist Party’s Central Committee, the shift in China’s growth model from fixed investment toward private consumption will occur too slowly. Many vested interests, including local governments and state-owned enterprises, are resisting change; a huge volume of private and public debt will go sour; and the country’s leadership is divided on how quickly reforms should be implemented. So, while China will avoid a hard landing in 2014, its medium-term prospects remain worrisome. - in project-syndicate.org

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Excellent choices "Obama to Nominate Fischer, Brainard, Powell to Fed’s Board

Nouriel Roubini ‏: Excellent choices "Obama to Nominate Fischer, Brainard, Powell to Fed’s Board" http://bloom.bg/1lIBy12- in twitter


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

US Recovery is still tentative and subject to downside risks

Nouriel Roubini ‏: Employment report suggest that the US recovery is still tentative and subject to downside risks- in twitter

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Bubbles can go on for quite a while

Bubbles can go on for quite a while, until there is a sharp change in monetary policy. Looking at the low interest rates I don’t expect any bubble to burst anytime soon. - in fuw.ch

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Bubbles In Several Housing Markets

Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in housing markets in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand, and, back for an encore, the UK (well, London). In emerging markets, bubbles are appearing in Hong Kong, Singapore, China, and Israel, and in major urban centers in Turkey, India, Indonesia, and Brazil.

Signs that home prices are entering bubble territory in these economies include fast-rising home prices, high and rising price-to-income ratios, and high levels of mortgage debt as a share of household debt. In most advanced economies, bubbles are being inflated by very low short- and long-term interest rates. Given anemic GDP growth, high unemployment, and low inflation, the wall of liquidity generated by conventional and unconventional monetary easing is driving up asset prices, starting with home prices. - Business Insider

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

The Fed Exit from QE will be slow

"The Federal Reserve’s exit from quantitative easing will be slow, keeping interest rates low.”


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Nouriel Roubini Interview ~ Lugano Fund Forum 2013

Lugano Fund Forum 2013 - Intervista a Nouriel Roubini


 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

India, Indonesia, Brazil, Turkey, South Africa, Hungary, Ukraine, Argentina, and Venezuela will remain fragile in 2014

Still, some emerging markets – namely, India, Indonesia, Brazil, Turkey, South Africa, Hungary, Ukraine, Argentina, and Venezuela – will remain fragile in 2014, owing to large external and fiscal deficits, slowing growth, below-target inflation, and election-related political tensions. Some of these countries – for example, Indonesia – have recently undertaken more policy adjustment and will be subject to lower risks, though their growth and asset markets remain vulnerable to policy and political uncertainties and potential external shocks. - in www.project-syndicate.org



Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Emerging Economies will grow faster in 2014

Emerging economies will grow faster in 2014 – closer to 5% year on year – for several reasons. Brisker recovery in advanced economies will boost imports from emerging markets. The Fed’s exit from QE will be slow, keeping interest rates low. Policy reforms in China will attenuate the risk of a hard landing. And, with many emerging markets still urbanizing and industrializing, their rising middle classes will consume more goods and services.

CommentsView/Create comment on this paragraphStill, some emerging markets – namely, India, Indonesia, Brazil, Turkey, South Africa, Hungary, Ukraine, Argentina, and Venezuela – will remain fragile in 2014, owing to large external and fiscal deficits, slowing growth, below-target inflation, and election-related political tensions.  Some of these countries – for example, Indonesia – have recently undertaken more policy adjustment and will be subject to lower risks, though their growth and asset markets remain vulnerable to policy and political uncertainties and potential external shocks.- in www.project-syndicate.org


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

I am not excessively concerned over Japan

 There is a whole bunch of counterarguments. First, you achieve 2% of inflation only when growth is robust. The better the growth in Japan – either because of monetary and fiscal stimulus or structural reforms – the better is the outlook for the debt dynamics. Second, there is no 1:1 relation between inflation rate and long term yields, as long as a central bank is aggressively buying a big fraction of these bonds for a prolonged period of time. Then the real rates tend to become negative – if inflation goes up even more, which again helps the debt dynamics. I am not excessively concerned over Japan. Of course, in the medium term Japan needs more structural reforms to enhance its growth potential, because only growth can really resolve the debt dynamics, fiscal adjustment alone is not sufficient. But they have time.- in fuw.ch


 

Nouriel Roubini

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

US, Economic performance in 2014 will benefit from the Shale-Energy Revolution

In the US, economic performance in 2014 will benefit from the shale-energy revolution, improvement in the labor and housing markets, and the "reshoring" of manufacturing. The downside risks result from political gridlock in Congress (particularly given the upcoming midterm election in November), which will continue to limit progress on long-term fiscal consolidation; a lack of clarity about the Federal Reserve's planned exit from quantitative easing (QE) and zero policy rates; and regulatory uncertainties. - in project syndicate


 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Japanification would imply Stagnation and outright Deflation

 How realistic is a deflation scenario in the industrialized countries, the Japanification?

Nouriel Roubini : Japanification would imply stagnation and outright deflation. As long as growth remains below trend, inflation is going to be low, but I don’t see the risk of outright deflation with exception of some countries of the Euro periphery: As long as Germany is not willing to reflate, internal devaluation is forced upon the periphery. It would be better if Germany allowed inflation to go beyond 2%. - in fuw.ch



Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Markets Are Underpricing The Risk Of A Slowdown In China

"In my view, the markets are underpricing the risk of a slowdown in China. We expect this year the growth in China would be 7.4%, whereas the consensus is above 8 percent." - in Economic Times

Related ETFs: iShares MSCI Emerging Markets (ETF) (EEM), iShares FTSE/Xinhua China 25 Index (ETF) (NYSE:FXI)

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

FED's Commitment to QE

In spite of the Fed’s impressive commitment to aggressive monetary easing, its effects on the real economy and on U.S. equities could end up being smaller and more fleeting than the effects of previous QE episodes. - in RGE

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

The Eurozone Fundamental Problems Remain Unresolved

While the eurozone’s tail risks are lower, its fundamental problems remain unresolved: low potential growth; high unemployment; still-high and rising levels of public debt; loss of competitiveness and slow reduction of unit labor costs (which a strong euro does not help); and extremely tight credit rationing, owing to banks’ ongoing deleveraging. Meanwhile, progress toward a banking union will be slow, while no steps will be taken toward establishing a fiscal union, even as austerity fatigue and political risks in the eurozone’s periphery grow. - in project syndicate

 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

QE Tapering to have positive impact on S. Korea

  Future tapering of the U.S. quantitative easing (QE) would influence the South Korean economy positively, a New York University economics professor said Monday.
"QE tapering will be positive to Korea," Nouriel Roubini said in Seoul at a meeting with South Korean Finance Minister Hyun Oh- seok, noting that the QE tapering would mean a recovery of the U.S. economy, on which South Korea heavily depends for trade, according to the Finance Ministry.
Interest rate hikes in the U.S. would lead to strong U.S. dollar, having a positive impact on exports, which account for around half of the South Korean economy, said Roubini. In addition, Roubini also said that South Korea held a positive position in terms of fiscal balance and sovereign debts, assessing that the April supplementary budget was appropriate and contributed to the country's recovery.
  



 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Roubini gets bullish on global economy

(CNBC) Economist Nouriel Roubini, renowned for his foretelling of doom and gloom in financial markets, has turned bullish in his 2014 outlook, expecting economic performance to “pick up modestly” in both advanced economies and emerging markets.

“The advanced economies, benefiting from a half-decade of painful private-sector deleveraging, a smaller fiscal drag, and maintenance of accommodative monetary policies, will grow at an annual pace closer to 1.9 percent,” he said in an opinion piece on the Project Syndicate website on Tuesday.

“Moreover, so-called tail risks will be less salient in 2014.”
Read the full story ›

 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

ISM data shows slowing

  Chicago ISM & regional survey suggest a weakening of the the ISM & manufacturing at the national level. US growth in H2 slowing to a crawl.


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

The Outlook for 2014 is dampened by longer-term constraints

The outlook for 2014 is dampened by longer-term constraints as well. Indeed, there is a looming risk of secular stagnation in many advanced economies, owing to the adverse effect on productivity growth of years of underinvestment in human and physical capital. And the structural reforms that these economies need to boost their potential growth will be implemented too slowly. - in www.project-syndicate.org



 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Roubini Optimistic for 2014

”The good news is that economic performance will pick up modestly in both advanced economies and emerging markets. The advanced economies, benefiting from a half-decade of painful private-sector deleveraging (households, banks, and non-financial firms), a smaller fiscal drag (with the exception of Japan), and maintenance of accommodative monetary policies, will grow at an annual pace closer to 1.9%.
“Moreover, so-called tail risks (low-probability, high-impact shocks) will be less salient in 2014. The threat, for example, of a eurozone implosion, another government shutdown or debt-ceiling fight in the United States, a hard landing in China, or a war between Israel and Iran over nuclear proliferation, will be far more subdued.” - in Project Syndicate


 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

The Global Growth will pick up modestly in 2014

Nouriel Roubini says that global growth will pick up modestly in 2014, while the risk of a major shock will diminish. - Project Syndicate

The global economy will grow faster in 2014 than it did in 2013, while tail risks will be lower. But, with the possible exception of the US, growth will remain anemic in advanced economies, and emerging-market fragility – including China’s uncertain efforts at economic rebalancing – could become a drag on global growth.

Read more at www.project-syndicate.org



Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Slow Growth and Short Tails by Nouriel Roubini

NEW YORK – The global economy had another difficult year in 2013. The advanced economies’ below-trend growth continued, with output rising at an average annual rate of about 1%, while many emerging markets experienced a slowdown to below-trend 4.8% growth. After a year of subpar 2.9% global growth, what does 2014 hold in store for the world economy?

The good news is that economic performance will pick up modestly in both advanced economies and emerging markets. The advanced economies, benefiting from a half-decade of painful private-sector deleveraging (households, banks, and non-financial firms), a smaller fiscal drag (with the exception of Japan), and maintenance of accommodative monetary policies, will grow at an annual pace closer to 1.9%.


Moreover, so-called tail risks (low-probability, high-impact shocks) will be less salient in 2014. The threat, for example, of a eurozone implosion, another government shutdown or debt-ceiling fight in the United States, a hard landing in China, or a war between Israel and Iran over nuclear proliferation, will be far more subdued.

Germany and The Eurozone

Suppose that growth is faltering next year in the Eurozone, unemployment is high, deflation a near and present danger and the Euro keeps on rising, then either the Germans accept a fiscal union, debt mutualisation and a fiscal stimulus and higher wages in Germany. Or, if the political constraints in Germany are such that they cant do that thing, like in the case of many other things, then they are going to outsource the job of saving the Eurozone to the only institution that has the firepower and of capable going ahead independently of legislative action and doing what is necessary. And that institution is the ECB.- in www.fuw.ch


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Focusing On Economic Fundamentals

As the market fixates on the additional liquidity provided by the ECB and other central banks, I want to return the focus to economic fundamentals, for which the outlook remains fragile. - in RGE

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Brazil: Signs Of An Economic Slowdown

Interesting times in Brazil as there are signs of an economic slowdown as global tail risks loom.

(Source: Roubini`s Official Twitter)

Related, iShares MSCI Brazil Index ETF (EWZ)

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Greece: There Will Be A Violent Reaction, A Revolution

I think you are deluding yourself to think that the alternative is going to be to stay in the euro, stay in a depression and eventually it will lead to so much social and political stability...there will be a violent reaction to it, a revolution. - Nouriel Roubini during a conference in Athens


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Many Advanced Economies Are Double Dipping

Japan joins Eurozone and the UK in experiencing a contracting GDP in Q4 of 2011. Many advanced economies double dipping.

(Source: Roubini`s Official Twitter)

Related, iShares MSCI Japan Index ETF (EWJ), Nikkei 225 Index;


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Chinese Residential Investment And Commercial Real-Estate Activity Are Slowing Sharply

Chinese residential investment and commercial real-estate activity are slowing sharply as home prices start to fall. Infrastructure investment is down as well, with many high-speed railway projects on hold and local governments and special-purpose vehicles struggling to obtain financing amid tightening credit conditions and lower revenues from land sales. - in Project-Syndicate



Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

US Economy: Growth Slowing To A Crawl

Chicago ISM & regional survey suggest a weakening of the the ISM & manufacturing at the national level. US growth in H2 slowing to a crawl. - in Twitter



Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Excessive Investment, Financial Crisis & Slow Growth

All historical episodes of excessive investment – including East Asia in the 1990s – have ended with a financial crisis and/ or a long period of slow growth. - in HSBC Global Banking and Markets

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

China: A Hard Landing Becomes More Likely In 2013

But a hard landing becomes more likely in 2013, as the stimulus fades, nonperforming loans rise, the investment bust accelerates, and the problem of rolling over the debts of provincial governments and their special investment vehicles can no longer be papered over. - in Irish Times
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

QE3 Effects

In spite of the Fed’s impressive commitment to aggressive monetary easing, its effects on the real economy and on U.S. equities could end up being smaller and more fleeting than the effects of previous QE episodes. - in RGE


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

We Are In The Process Of Very Painful Deleveraging In Advanced Economies

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. - in Bloomberg

 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Germany`s Economic Outlook

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. - in Bloomberg

Related: Dax Index, EuroStoxx 50 Index



Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

What To Do When Arriving A Country

When I arrive in a country, the first thing I do is ask the cab driver how the economy is doing or what he thinks about their government. When I’m in the hotel, I ask the same questions, or I walk around and go to the local shopping center. You know, I try to get a sense. And when I’m in a country I also try to talk to people who are not necessarily purely the elite.

I think it’s true that the 1 percent or the elite are living in a world of, maybe, excessive privilege, and they don’t fully realize how much pain and suffering, how much anxiety exists out there. I think there are lots of things that we have to figure out to make sure that we don’t have a social and political backlash. - in Business Insider



 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Thunderously Right For So Thunderously Long

"Roubini has been so thunderously right for so thunderously long as to defy thunderous description." - Tom Keene, Bloomberg


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

These Are The Most Interesting Times

"I love what I do, and for me it's not work. I get a lot out of what I do intellectually. These are the most interesting times that anyone involved in macro could think of - maybe too interesting. - in Foreign Policy


 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

We Will Have A Dovish ECB In 2013

Bearish ECB forecasts for 2013 - EZ recession & below target inflation - imply a Dovish ECB in 2013. So Scrooge pospones Xmas gifts to Easter. - in Roubini`s Official Twitter


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

To Keep Greece In The Eurozone, You Need A Transfer Union

To keep Greece in the euro zone, effectively you need a transfer union, you have to realize that the problems of Greece are long-term, it’s going to take 10 to 20 years to do the austerity and the reform to stabilize Greece and therefore you have to give money and you have to be patient.

If you’re willing to do that for the sake of keeping the euro zone together, whether it’s economic reasons or political or geo political or foreign policy then Greece has a chance. - in The WSJ

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Inequality: It Is Not Clear We Will Do Anything About It

“This is an issue that is coming, but it is not there yet. It is clear in the U.S. we are talking about inequality. It is not clear we will do anything about it.” - in NYT

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

US Killings By Guns Outpace Those In Other Civilized Countries

In the US killings by guns outpace those in other civilized countries by a ratio of 50 to 1 or more. - in Roubini`s Official Twitter


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

The Euro Zone Periphery Shows Little Sign Of Recovery

"Nonetheless, the euro zone periphery shows little sign of recovery: GDP continues to shrink, owing to ongoing fiscal austerity, the euro’s excessive strength, a severe credit crunch underpinned by banks’ shortage of capital, and depressed business and consumer confidence. Moreover, recession on the periphery is now spreading to the euro zone core, with French output contracting and even Germany stalling as growth in its two main export markets is either falling (the rest of the euro zone) or slowing (China and elsewhere in Asia)." - in Live Mint 

Related: iShares MSCI Italy Index ETF (EWI), iShares MSCI Spain Index ETF (EWP), iShares Germany ETF (EWG)

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

"Benefit" Of Falling Off The Cliff

"Benefit" of falling off the cliff: we get more than 2 months after Jan 1st to hit the debt ceiling as spending drops and taxes are hiked. - in Roubini`s Official Twitter

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

The Debt Ceiling Is A Dumb Idea

The debt ceiling is a dumb idea: once Congress votes a budget, that determines the debt issued. So this yearly farce/saga on ceiling is crazy. - in Roubini`s Official Twitter

Related: SPDR SP 500 ETF (NYSE:SPY)


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

A Zero Sum Game In Currencies/ Trade Balances

If a currency is weaker another is stronger; if a trade balance is improved another is worsened. Zero sum game in currencies/trade balances. - in Roubini`s Official Twitter




Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Fears Of Early Fed QE Phase-Out Are Way Exaggerated

Fears of early Fed QE phase-out are way exaggerated. Fed minutes noises are most likely another Fed fake... expect QE thru all of 2013. - in Twitter 

Related: SPDR SP 500 ETF (SPY), SPDR Gold Trust ETF (GLD)

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

I think the ECB will end up in QE next year

 Will the ECB have to go beyond forward guidance?

The refinancing rate is zero, they could introduce negative rates on deposits but not too negative ones: Maybe –0.1%, but not –1%, otherwise they create problems in money markets. And such a cut won’t make a difference. I think the ECB will end up in QE next year, because even the introduction of negative rates won’t prevent the Euro from appreciating: the current account is in a large surplus, the tailrisks of the Eurozone have been reduced, so the money is flowing back. These fundamental pressures remain. So, the only escape is outright QE.



Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

I am not excessively concerned over Japan

And how about the original: Japan? If Abenomics works, inflation should rise and with it yields. How big is the risk of reaching a tipping point, when Japan will have trouble servicing its huge debt?
Nouriel Roubini : There is a whole bunch of counterarguments. First, you achieve 2% of inflation only when growth is robust. The better the growth in Japan – either because of monetary and fiscal stimulus or structural reforms – the better is the outlook for the debt dynamics. Second, there is no 1:1 relation between inflation rate and long term yields, as long as a central bank is aggressively buying a big fraction of these bonds for a prolonged period of time. Then the real rates tend to become negative – if inflation goes up even more, which again helps the debt dynamics. I am not excessively concerned over Japan. Of course, in the medium term Japan needs more structural reforms to enhance its growth potential, because only growth can really resolve the debt dynamics, fiscal adjustment alone is not sufficient. But they have time. - in www.fuw.ch


Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Roubini : 6 Reasons Why Gold Will Crash To $1,000

Why Gold Will Crash To $1,000 - Nouriel Roubini Price Prediction

Consider these six bearish arguments for lower precious metals prices. Do you agree with these statements?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.


Reason No. 3: The lack of earnings from gold argument -- While other forms of investment generate income, gold does not. So Roubini sees gold solely as a play on capital appreciation and that with the global economy, arguably, recovering, other assets are seen as generating higher returns. Indeed, QE-boosted US and global equities have vastly outperformed gold since the sharp rise in gold prices in early 2009.

Reason No. 4: The arguably 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 interest policy rates, which means that real rates will rise, rather than fall. With gold performing better in a zero or negative interest rate environment Roubini thus sees its attraction waning as interest rates start to rise.

Reason No. 5: Roubini argues that some of the Central banks of the more indebted nations may be tempted to liquidate part of their gold holdings and thus further depress the gold market. He points specifically to Cyprus where a report that it might sell a small fraction -- some €400 million ($520 million) -- of its gold reserves may have contributed to triggering a 13% fall in gold prices in April. Countries like Italy, which has massive gold reserves (above $130 billion), he says, could be similarly tempted, driving down prices further Roubini comments..

Reason No. 6: Here he blames some extreme political conservatives, particularly in the U.S. for overhyping gold in ways he considers to have been counterproductive. These 'fanatics', as he calls them, have suggested a return to some form of gold standard as being inevitable as they predict hyperinflation may ensue from the Central bank debasement of currency through Quantitative Easing. He goes on to say that given the absence of any conspiracy to expropriate citizens wealth, falling inflation, and what he sees as the inability to use gold as a currency, such arguments cannot be sustained. www.mineweb.com/mineweb/content/en/minew

­­eb-gold-news?oid=192868&sn=Detail

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

I don’t see the risk of outright Deflation with exception of some countries of the Euro periphery

How realistic is a deflation scenario in the industrialized countries, the Japanification?
 
Japanification would imply stagnation and outright deflation. As long as growth remains below trend, inflation is going to be low, but I don’t see the risk of outright deflation with exception of some countries of the Euro periphery: As long as Germany is not willing to reflate, internal devaluation is forced upon the periphery. It would be better if Germany allowed inflation to go beyond 2%.




 Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics