Investors should have a modest share of Gold

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.





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 : I am in wonky DC for the IMF Annual Meetings

I am in wonky DC for the IMF Annual Meetings. Plenty of topics discussed: faltering global growth as world flies on a single engine (U.S.)? - 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

Fed Watch: Change in Communication Likely in October

Roubini's new RGE paper: Fed Watch: Change in Communication Likely in October
The main issue for the markets is when and how the Fed should make an explicit switch to a “state-contingent” policy without causing a “rate riot.” www.roubini.com/analysis/189121.php …

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 Bullish on Kazakhstan

 "Given the shift of economic gravity towards Asia, opportunities for Kazakhstan to be a regional and even global driver of economic growth are obviously expanding," international economist Mr. Nouriel Roubini said during his remarks at "Samruk Kazyna Transformation Forum" held in Astana Kazakhstanon October 6, 2014 .  "In this context, the efforts of the country's leadership to create a modern and attractive development model can only be welcome.  And in this model, a modernized and competitive sovereign wealth fund which effectively manages state assets is a key element", Roubini said.






 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 sees lower Chinese Growth in 2015

David Nowakowski of RGE Roubini's analyst thinks Aussie Dollar has room for downside risks.

     "Although some easing of China's credit crunch will help Australian exports in the short run, we see lower Chinese growth in 2015 as a headwind that will weaken Australia's growth and inflation next year, and weigh on growth-orientated assets such as equities and the Australian dollar."


    "The Australian dollar is likely to weaken to below US75¢ - a fall of around 20 per cent - on a combination of the lower interest rate differential and slumping GDP growth, with commodity price effects outweighing volumes."

 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 Remain "Bubbly"

NEW YORK – An increasingly obvious paradox has emerged in global financial markets this year. Though geopolitical risks – the Russia-Ukraine conflict, the rise of the Islamic State and growing turmoil across the Middle East, China’s territorial disputes with its neighbors, and now mass protests in Hong Kong and the risk of a crackdown – have multiplied, markets have remained buoyant, if not downright bubbly.

Indeed, oil prices have been falling, not rising. Global stock markets have, overall, reached new highs. And credit markets show low spreads, while long-term bond yields have fallen in most advanced economies.

Yes, financial markets in troubled countries – for example, Russia’s currency, equity, and bond markets – have been negatively affected. But the more generalized contagion to global financial markets that geopolitical tensions typically engender has failed to materialize.

Why the indifference? Are investors too complacent, or is their apparent lack of concern rational, given that the actual economic and financial impact of current geopolitical risks – at least so far – has been modest?

Read more at http://www.project-syndicate.org/commentary/nouriel-roubini-asks-why-global-financial-markets-remain-buoyant-in-the-face-of-mounting-geopolitical-risks#RVr6ObMC3TzyAlJ0.99



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 Was Too Hyped

Two years ago at the Milken Conference, Eike Batista criticized me in our panel for saying that Brazil was too hyped. Today he is nearly bankrupt. - Via tweet



Related trading instruments: iShares MSCI Emerging Markets (ETF) (EEM), iShares MSCI Brazil Index (ETF) (NYSE:EWZ), 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

The positive effects of reforms will take two to five years to have an impact

 The positive effects of reforms will take two to five years to have an impact





 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 only Middle East conflict that could cause oil prices to spike – a war between Israel and Iran

Third, the turmoil in the Middle East has not triggered a massive shock to oil supplies and prices like those that occurred in 1973, 1979, or 1990. On the contrary, there is excess capacity in global oil markets. Iraq may be in trouble, but about 90% of its oil is produced in the south, near Basra, which is fully under Shia control, or in the north, under the control of the Kurds. Only about 10% is produced near Mosul, now under the control of the Islamic State.

Finally, the one Middle East conflict that could cause oil prices to spike – a war between Israel and Iran – is a risk that, for now, is contained by ongoing international negotiations with Iran to contain its nuclear program.

So there appear to be good reasons why global markets so far have reacted benignly to today’s geopolitical risks. What could change that?

Several scenarios come to mind. First, the Middle East turmoil could affect global markets if one or more terrorist attack were to occur in Europe or the US – a plausible development, given that several hundred Islamic State jihadists are reported to have European or US passports. Markets tend to disregard the risks of events whose probability is hard to assess but that have a major impact on confidence when they do occur. Thus, a surprise terrorist attack could unnerve global markets.

Read more at http://www.project-syndicate.org/commentary/nouriel-roubini-asks-why-global-financial-markets-remain-buoyant-in-the-face-of-mounting-geopolitical-risks#cGS9ow6GRvwQA0jd.99

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

Housing bubble 20 can only end badly Nouriel Roubini

Housing bubble 2.0 can only end badly The global economy's new housing bubbles may not be about to burst just yet, because the forces feeding them – especially easy money and the need to hedge against inflation – are still fully operative



 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’ Rational Complacency By Nouriel Roubini

NEW YORK – An increasingly obvious paradox has emerged in global financial markets this year. Though geopolitical risks – the Russia-Ukraine conflict, the rise of the Islamic State and growing turmoil across the Middle East, China’s territorial disputes with its neighbors, and now mass protests in Hong Kong and the risk of a crackdown – have multiplied, markets have remained buoyant, if not downright bubbly.

Indeed, oil prices have been falling, not rising. Global stock markets have, overall, reached new highs. And credit markets show low spreads, while long-term bond yields have fallen in most advanced economies.

Yes, financial markets in troubled countries – for example, Russia’s currency, equity, and bond markets – have been negatively affected. But the more generalized contagion to global financial markets that geopolitical tensions typically engender has failed to materialize.

Why the indifference? Are investors too complacent, or is their apparent lack of concern rational, given that the actual economic and financial impact of current geopolitical risks – at least so far – has been modest?

Global markets have not reacted for several reasons. For starters, central banks in advanced economies (the United States, the eurozone, the United Kingdom, and Japan) are holding policy rates near zero, and long-term interest rates have been kept low. This is boosting the prices of other risky assets such as equities and credit.
Read more at http://www.project-syndicate.org/commentary/nouriel-roubini-asks-why-global-financial-markets-remain-buoyant-in-the-face-of-mounting-geopolitical-risks#tQiL1yPI3cZCSzfK.99





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

An Obvious Paradox Occurred with Oil Prices

"A century ago, financial markets priced in a very low probability that a major conflict would occur, blissfully ignoring the risks that led to the first world war until late in the summer of 1914," Roubini said.
"Back then, markets were poor at correctly pricing low-probability, high-impact tail risks. They still are."

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 : The stereotype about BRICS is false

Nouriel Roubini (Professor of ecnomics at New York University)
With the right monetary and credit easing, the fiscal adjustments and the structure reform the chances that Eurozone recovery is going to be stronger. The stereotype about Brics is false: three of them this year are going to grow less than United States. So the divide is going to be: which of the countries have the political institution to do economic adjustments and reforms . One of the reasons why italian economic growth has been stagnant is because there are plenty of rigidities. Renzi maybe is too ambitious but I think it is the right horizon.The positive effects of reforms will take two to five years to have an impact






 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 maps out the Kremlin's plan for a re-divided world. Putin's Eurasian Union Plan

NEW YORK – The escalating conflict in Ukraine between the Western-backed government and Russian-backed separatists has focused attention on a fundamental question: What are the Kremlin’s long-term objectives? Though Russian President Vladimir Putin’s immediate goal may have been limited to regaining control of Crimea and retaining some influence in Ukrainian affairs, his longer-term ambition is much bolder.

That ambition is not difficult to discern. Putin once famously observed that the Soviet Union’s collapse was the greatest catastrophe of the twentieth century. Thus, his long-term objective has been to rebuild it in some form, perhaps as a supra-national union of member states like the European Union.

This goal is not surprising: declining or not, Russia has always seen itself as a great power that should be surrounded by buffer states. Under the Czars, Imperial Russia extended its reach over time. Under the Bolsheviks, Russia built the Soviet Union and a sphere of influence that encompassed most of Central and Eastern Europe. And now, under Putin’s similarly autocratic regime, Russia plans to create, over time, a vast Eurasian Union.

Read more at http://www.project-syndicate.org/commentary/nouriel-roubini-maps-out-the-kremlin-s-plan-for-a-re-divided-world#rOHpDSKD5CgciiUt.99





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

Canada needs to weaken The Loonie

I would say if your currency was 10 percent weaker, that would help manufacturing. It might not be conventional wisdom, but at the margin, I would say, keeping your currency weaker right now, it's important.



 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's RGB Bearish on Australian Dollar

David Nowakowski of Roubini's analyst thinks Aussie Dollar has room for downside risks.

     "Although some easing of China's credit crunch will help Australian exports in the short run, we see lower Chinese growth in 2015 as a headwind that will weaken Australia's growth and inflation next year, and weigh on growth-orientated assets such as equities and the Australian dollar."


    "The Australian dollar is likely to weaken to below US75¢ - a fall of around 20 per cent - on a combination of the lower interest rate differential and slumping GDP growth, with commodity price effects outweighing volumes."


 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 : Fed, ECB, BoJ and BoE on very different policy paths ahead

Nouriel Roubini : Fed, ECB, BoJ and BoE on very different policy paths ahead. Important implications for currency and bond yields - 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

Roubini : ECB balance sheet rise is demand based with TLTRO

Nouriel Roubini : ECB balance sheet rise is demand based with TLTRO; thus its flop. ABS & Cov Bond purchases instead will sharply increase its balance sheet - 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

FOMC: Dovish statement

Nouriel Roubini : FOMC: Dovish statement, hawkish dots. When move to from considerable period to patient?When move away from balanced risks in labor market? - 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

BoE highly unlikely to hike policy rates this year

BoE highly unlikely to hike policy rates this year even if the Scots vote NO to independence. Let alone if vote were to be YES. - 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

Roubini’s firm warns of 20% Australian Dollar Slump

"Domestically, mining output is still strong, but investment in the sector is not, and iron ore prices are plummeting," wrote Roubini's local analyst David Nowakowski. "Although some easing of China's credit crunch will help Australian exports in the short run, we see lower Chinese growth in 2015 as a headwind that will weaken Australia's growth and inflation next year, and weigh on growth-orientated assets such as equities and the Australian dollar." Mr Nowakowski said flagging growth and low inflation would create room for the Reserve Bank of Australia to make a "cut or two in interest rates, to 2 per cent".
 Read more: http://www.smh.com.au/business/the-economy/dr-doom-nouriel-roubini8217s-firm-warns-of-20-australian-dollar-slump-20140922-10kc2e.html#ixzz3E3L5JJAG

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

ECB has effectively started QE

ECB has effectively started QE as QE is balance sheet increase & it doesn't matter whether you buy private or public assets. Blended QE/CE - via 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

Gold falls to 2014 lows , Where have the Gold bugs being hiding ?

Gold falls to 2014 lows. Where have the Gold bugs being hiding for the last 3 years since gold tumbled from it near 2k peak? In gold caves? - 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

Roubini : Best Ponzi scheme: Buy Bitcoin with Gold

Nouriel Roubini  : Best ponzi scheme: buy bitcoin with gold and gold with bitcoin...- via 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

Roubini explains Europe's Economic Troubles

Nouriel Roubini (Professor of economics at New York University)With the right monetary and credit easing, the fiscal adjustments and the structure reform the chances that Eurozone recovery is going to be stronger.




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

Investors should have a modest share of Gold

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.

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

Low Growth: Brazil, Russia, China & South Africa

"Brazil's GDP grew by only 1% last year, and may not grow by more than 2% this year, with its potential growth barely above 3%. Russia's economy may grow by barely 2% this year, with potential growth also at around 3%, despite oil prices being around $100 a barrel. India had a couple of years of strong growth recently (11.2% in 2010 and 7.7% in 2011) but slowed to 4% in 2012. China's economy grew by 10% a year for the last three decades, but slowed to 7.8% last year and risks a hard landing. And South Africa grew by only 2.5% last year and may not grow faster than 2% this year." - an excerpt from the Is the emerging market boom over?




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

Karl Marx oversold socialism, but he was right

The problem is not new. Karl Marx oversold socialism, but he was right in claiming that globalization, unfettered financial capitalism, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct. As he argued, unregulated capitalism can lead to regular bouts of over-capacity, under-consumption, and the recurrence of destructive financial crises, fueled by credit bubbles and asset-price booms and busts.




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 to continue benefit from Shale Energy

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.



 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 Benefits Of The U.S. Oil Production Boom

"The domestic benefits of the U.S. oil production boom are well documented — everything from the creation of high-paying jobs to sending less money to foreign oil producers.
Less well appreciated are the geopolitical benefits. U.S. oil production has already paid foreign policy dividends in at least one vital area: It has paved the way for stronger sanctions on Iran by helping to keep the global oil market well-supplied and minimizing oil price volatility.
This development is timely and instructive."


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 Banks Are Even-Bigger-To-Fail

"Five years after Lehman's collapse US banks are even-bigger-to-fail given consolidation: J.P. Morgan taking over Bear Stearns, Bank of America taking Countrywide & Merrill Lynch, Wells Fargo taking Wachovia." - in Twitter
Related stocks: Bank of America (BAC), J.P. Morgan (JPM), Wells Fargo (WFC)






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

Italy is in Crisis

"if the situation worsens, which now seems hardly impossible, the consequences could be very damaging for Italy. "Our most probable scenario is elections in early 2014 but we do not exclude even sooner than that.

The markets are reasoning in a similar way. If there is no solution, the spread will rise to 300 (3.0 percentage points) in a few days and the calm period for the Italian stock market will come to an end. Bank stocks will be particularly hard hit and credit costs will continue rising. The sooner the elections, the worst the damage for bonds." - in brecorder

Related ETFs: iShares MSCI Italy Index ETF (EWI)





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

Be Sure Your Seat Belt Is Securely Fastened

“Be sure your seat belt is securely fastened, because nothing has really come to rest. We have entered the ‘New Abnormal’, a period in which...the wise investor is prepared to be surprised.”

Related ETFs: iShares MSCI Emerging Markets (ETF) (EEM), SPDR SP 500 ETF (NYSE: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

Introducing Draghinomics : A Weaker Euro for a Stronger Europe

NEW YORK – Two years ago, Shinzo Abe’s election as Japan’s prime minister led to the advent of “Abenomics,” a three-part plan to rescue the economy from a treadmill of stagnation and deflation. Abenomics’ three components – or “arrows” – comprise massive monetary stimulus in the form of quantitative and qualitative easing (QQE), including more credit for the private sector; a short-term fiscal stimulus, followed by consolidation to reduce deficits and make public debt sustainable; and structural reforms to strengthen the supply side and potential growth.

It now appears – based on European Central Bank President Mario Draghi’s recent Jackson Hole speech – that the ECB has a similar plan in store for the eurozone. The first element of “Draghinomics” is an acceleration of the structural reforms needed to boost the eurozone’s potential output growth. Progress on such vital reforms has been disappointing, with more effort made in some countries (Spain and Ireland, for example) and less in others (Italy and France, to cite just two).

But Draghi now recognizes that the eurozone’s slow, uneven, and anemic recovery reflects not only structural problems, but also cyclical factors that depend more on aggregate demand than on aggregate supply constraints. Thus, measures to increase demand are also necessary.

Read more at http://www.project-syndicate.org/commentary/nouriel-roubini-supports-ecb-president-mario-draghi-s-plan-to-revive-eurozone-growth#RO6MIoX7gMVWMSIm.99




 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 on The ECB Quantitative Easing

 Sept. 5 (Bloomberg) -- In today's "Morning Must Read," Bloomberg’s Adam Johnson and Tom Keene recap the op-ed pieces and analyst notes providing insight behind today's headlines on "Bloomberg Surveillance.”







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

Abenomics, European-style

Two years ago, Shinzo Abe’s election as Japan’s prime minister led to the advent of “Abenomics”, a three-part plan to rescue the economy from a treadmill of stagnation and deflation. Abenomics’ three components—or “arrows”—comprise massive monetary stimulus in the form of quantitative and qualitative easing (QQE), including more credit for the private sector; a short-term fiscal stimulus, followed by consolidation to reduce deficits and make public debt sustainable; and structural reforms to strengthen the supply side and potential growth. It now appears—based on European Central Bank (ECB) president Mario Draghi’s recent Jackson Hole speech—that ECB has a similar plan in store for the euro zone. The first element of “Draghinomics” is an acceleration of the structural reforms needed to boost the euro zone’s potential output growth. Progress on such vital reforms has been disappointing, with more effort made in some countries (Spain and Ireland, for example) and less in others (Italy and France, to cite just two). But Draghi now recognizes that the euro zone’s slow, uneven, and anaemic recovery reflects not only structural problems, but also cyclical factors that depend more on aggregate demand than on aggregate supply constraints. Thus, measures to increase demand are also necessary.



 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 Sees Start of Quantitative Easing in ECB Action

 Sept. 5 (Bloomberg) -- Bloomberg’s Betty Liu reports that New York University professor Nouriel Rubini has called yesterday’s action by the European Central Bank the start of quantitative easing. She speaks in today’s “Movers and Shakers” on “In The Loop.”





 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: ECB Policy to Have Significant Impact Over Time

 Sept. 5 (Bloomberg) -- In today's "Morning Must Read," Bloomberg’s Adam Johnson and Tom Keene recap the op-ed pieces and analyst notes providing insight behind today's headlines on "Bloomberg Surveillance.”





 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 Sees Weaker Euro Amid ECB's Policy Easing

 Sept. 5 (Bloomberg) -- Nouriel Roubini, chairman of Roubini Global Economics LLC and a professor at New York University, discusses the European Central Bank's policy measures announced yesterday and its expected impact on bond and currency markets. He talks with Mark Barton from the Ambrosetti Workshop in Cernobbio, Italy, on Bloomberg Television's "Countdown." (Source: 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

From Japan’s Abenomics to Europe’s Draghinomics

by Nouriel Roubini, September 03 2014, 12:18

TWO years ago, Shinzo Abe’s election as Japan’s prime minister led to the advent of "Abenomics", a three-part plan to rescue the economy from a treadmill of stagnation and deflation.

Abenomics’s three components — or "arrows" — comprise huge monetary stimulus in the form of quantitative and qualitative easing (QQE), including more credit for the private sector; a short-term fiscal stimulus, followed by consolidation to reduce deficits and make public debt sustainable; and structural reforms to strengthen the supply side and potential growth.

It now appears — based on European Central Bank (ECB) president Mario Draghi’s recent Jackson Hole speech — that the ECB has a similar plan in store for the eurozone. The first element of "Draghinomics" is an acceleration of the structural reforms needed to boost the potential output growth. But Draghi recognises that the eurozone’s slow, uneven and anaemic recovery reflects not only structural problems, but cyclical factors that depend more on aggregate demand than on aggregate supply constraints. Thus, measures to increase demand are also necessary.

Here, then, is Draghinomics’s second arrow: to reduce the drag on growth from fiscal consolidation while maintaining lower deficits and greater debt sustainability. There is some flexibility in how fast the fiscal target can be achieved, especially now that a lot of front-loaded austerity has occurred and markets are less nervous about the sustainability of public debt.

Moreover, while the eurozone periphery may need more consolidation, parts of the core — say, Germany — could pursue a temporary fiscal expansion (lower taxes and more public investment) to stimulate domestic demand and growth. And a eurozone-wide infrastructure-investment programme could boost demand while reducing supply-side bottlenecks.

The third element of Draghinomics — similar to the QQE of Abenomics — will be quantitative and credit easing in the form of purchases of public bonds and measures to boost private-sector credit growth. Credit easing will start soon with targeted long-term refinancing operations. When regulatory constraints are overcome, the ECB will also begin purchasing private assets.

Now Draghi has signalled that, with the eurozone one or two shocks away from deflation, the inflation outlook may soon justify quantitative easing (QE) like that conducted by the US Federal Reserve, the Bank of Japan and the Bank of England: outright large-scale purchases of eurozone members’ sovereign bonds. Indeed, it is likely that QE will begin by early next year.

Quantitative and credit easing could affect the outlook for eurozone inflation and growth through several transmission channels. Shorter-and longer-term bond yields in core and periphery countries — and spreads in the periphery — may decline further, lowering the cost of capital for the public and private sectors. The value of the euro may fall, boosting competitiveness and net exports. Eurozone stock markets could rise, leading to positive wealth effects.

Some more hawkish ECB officials worry QE will lead to moral hazard by weakening governments’ commitment to austerity and structural reforms. But in a situation of near-deflation and near-recession, the ECB should do whatever is necessary, regardless of these risks.

Moreover, QE may actually reduce moral hazard. If QE and looser short-term fiscal policies boost demand, growth and employment, governments may be more likely to implement politically painful structural reforms and long-term fiscal consolidation.

Draghi correctly points out that QE would be ineffective unless governments implement faster supply-side structural reforms and the right balance of short-term fiscal flexibility and medium-term austerity.

In Japan, although QQE and short-term fiscal stimulus boosted growth and inflation in the short run, slow progress on the third arrow of structural reforms, along with the effects of the current fiscal consolidation, are now taking a toll on growth.

As in Japan, all three arrows of Draghinomics must be launched to ensure that the eurozone gradually returns to competitiveness, growth, job creation and medium-term debt sustainability. By the end of this year, it is to be hoped, the ECB will start to do its part by implementing quantitative and credit easing.

• Roubini is chairman of Roubini Global Economics.

Project Syndicate, 2014



 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 Japan Abe needs to do

In Japan, Prime Minister Shinzo Abe's government has made significant headway in overcoming almost two decades of deflation, thanks to monetary easing and fiscal expansion.
The main uncertainties stem from the coming increase in the consumption tax and slow implementation of the third "arrow" of "Abenomics," namely structural reforms and trade liberalization.


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

Mario Draghi to bring Abenomics to Europe

"It now appears – based on European Central Bank President Mario Draghi's recent Jackson Hole speech – that the ECB has a similar plan in store for the euro zone," Nouriel Roubini, chairman of Roubini Global Economics wrote in an op-ed published on Project Syndicate's website on Sunday, referring to "Abenomics" – Abe's economic revival plan consisting of fiscal stimulus, monetary easing and structural reforms.



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 : Abenomics, European-Style

NOURIEL ROUBINI

NEW YORK – Two years ago, Shinzo Abe’s election as Japan’s prime minister led to the advent of “Abenomics,” a three-part plan to rescue the economy from a treadmill of stagnation and deflation. Abenomics’ three components – or “arrows” – comprise massive monetary stimulus in the form of quantitative and qualitative easing (QQE), including more credit for the private sector; a short-term fiscal stimulus, followed by consolidation to reduce deficits and make public debt sustainable; and structural reforms to strengthen the supply side and potential growth.

It now appears – based on European Central Bank President Mario Draghi’s recent Jackson Hole speech – that the ECB has a similar plan in store for the eurozone. The first element of “Draghinomics” is an acceleration of the structural reforms needed to boost the eurozone’s potential output growth. Progress on such vital reforms has been disappointing, with more effort made in some countries (Spain and Ireland, for example) and less in others (Italy and France, to cite just two).

But Draghi now recognizes that the eurozone’s slow, uneven, and anemic recovery reflects not only structural problems, but also cyclical factors that depend more on aggregate demand than on aggregate supply constraints. Thus, measures to increase demand are also necessary.

Here, then, is Draghinomics’ second arrow: to reduce the drag on growth from fiscal consolidation while maintaining lower deficits and greater debt sustainability. There is some flexibility in how fast the fiscal target can be achieved, especially now that a lot of front-loaded austerity has occurred and markets are less nervous about the sustainability of public debt. Moreover, while the eurozone periphery may need more consolidation, parts of the core – say, Germany – could pursue a temporary fiscal expansion (lower taxes and more public investment) to stimulate domestic demand and growth. And a eurozone-wide infrastructure-investment program could boost demand while reducing supply-side bottlenecks.

Read more at : http://www.project-syndicate.org/commentary/nouriel-roubini-supports-ecb-president-mario-draghi-s-plan-to-revive-eurozone-growth#ZLydQHxPuuxleLvx.99


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

Italy is in Crisis

"if the situation worsens, which now seems hardly impossible, the consequences could be very damaging for Italy. "Our most probable scenario is elections in early 2014 but we do not exclude even sooner than that.

The markets are reasoning in a similar way. If there is no solution, the spread will rise to 300 (3.0 percentage points) in a few days and the calm period for the Italian stock market will come to an end. Bank stocks will be particularly hard hit and credit costs will continue rising. The sooner the elections, the worst the damage for bonds." - in brecorder

Related ETFs: iShares MSCI Italy Index ETF (EWI)





 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 Markets in a small storm

The financial turmoil that hit emerging-market economies last spring, following the US Federal Reserve’s “taper tantrum” over its quantitative-easing (QE) policy, has returned with a vengeance. This time, the trigger was a confluence of several events: a currency crisis in Argentina, where the authorities stopped intervening in the forex markets to prevent the loss of foreign reserves; weaker economic data from China; and persistent political uncertainty and unrest in Turkey, Ukraine, and Thailand.

This mini perfect storm in emerging markets was soon transmitted, via international investors’ risk aversion, to advanced economies’ stock markets. But the immediate trigger for these pressures should not be confused with their deeper causes: Many emerging markets are in real trouble.

The list includes India, Indonesia, Brazil, Turkey, and South Africa – dubbed the “Fragile Five,” because all have twin fiscal and current-account deficits, falling growth rates, above-target inflation, and political uncertainty from upcoming legislative and/or presidential elections this year. But five other significant countries – Argentina, Venezuela, Ukraine, Hungary, and Thailand – are also vulnerable. Political and/or electoral risk can be found in all of them, loose fiscal policy in many of them, and rising external imbalances and sovereign risk in some of them.

Then, there are the over-hyped BRICS countries, now falling back to reality. Three of them (Brazil, Russia, and South Africa) will grow more slowly than the United States this year, with real (inflation-adjusted) GDP rising at less than 2.5%, while the economies of the other two (China and India) are slowing sharply. Indeed, Brazil, India, and South Africa are members of the Fragile Five, and demographic decline in China and Russia will undermine both countries’ potential growth.

The largest of the BRICS, China, faces additional risk stemming from a credit-fueled investment boom, with excessive borrowing by local governments, state-owned enterprises, and real-estate firms severely weakening the asset portfolios of banks and shadow banks. Most credit bubbles this large have ended up causing a hard economic landing, and China’s economy is unlikely to escape unscathed, particularly as reforms to rebalance growth from high savings and fixed investment to private consumption are likely to be implemented too slowly, given the powerful interests aligned against them.

Via - http://www.project-syndicate.org/commentary/nouriel-roubini-explains-why-many-previously-fast-growing-economies-suddenly-find-themselves-facing-strong-headwinds





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

Countdown to Draghinomics

Nouriel Roubini : My new paper: Countdown to ‘Draghinomics’ (that mimics the 3 arrows of Abenomics). roubini.com/analysis/188930.php … … … When will the ECB do QE? $ - 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

In Bahrain Water more costly than Gasoline

Nouriel Roubini : In Bahrain water more costly than gasoline. Gasoline subsidized. Water costly as imported or produced with energy intensive desalinization- 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

China Weakness a Risk to Advanced Economies

The deep causes of last year’s turmoil in emerging markets have not disappeared. The risk of a hard landing in China poses a serious threat to emerging Asia, commodity exporters around the world, and even advanced economies.


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, The long-term aspirations of Vladimir Putin

Originally posted in Romanian @ http://www.cotidianul.ro/nouriel-roubini-despre-aspiratiile-pe-termen-lung-ale-lui-vladimir-putin-245164/  and translated below :

Unfortunately, the USA and EU sanctions that have been imposed only Russia could have the effect of reinforcing the beliefs of Putin and his advisers as Slavophiles nationalists that Russia's future lies not only in the West but also in an integration project different in the East, writes Nouriel Roubini, in an article published by Les Echos.

Escalating conflict in Ukraine, the Western-backed government and separatists backed by Russia, raises a fundamental question: what are the long term aspirations of the Kremlin? While the objective of Russian President Vladimir Putin was the first phase in a limited control over the Crimea and the preservation of a certain influence on Ukrainian business, long-term ambition is shown to be more courageous.

This ambition is increasingly evident. In a famous statement, Putin said that the collapse of the Soviet Union was the greatest catastrophe of the twentieth century. Thus, his goal is to rebuild long-term entity, in one form or another by means of a supranational union consisting of Member States, like the European Union.
Great Eurasian Economic Union

A suction least surprising: whatever the problem its decline, Russia is considered a great power surrounded by buffer states. Between countries, Russia Imperial was able to expand. During Bolshevik Russia came to build the Soviet Union created a sphere of influence which included much of Central and Eastern Europe. And behold, from now on, under the equally autocratic Putin, Russia is trying to establish progressively a large Eurasian Economic Union (UEE).


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

Falling potential growth, post-crisis frictions have pulled the U.S. neutral policy rate from above 4% to below 3.7%

Falling potential growth, post-crisis frictions have pulled the U.S. neutral policy rate from above 4% to below 3.7%. http://www.roubini.com/analysis/188887 - 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