Archive for December, 2008
Project Syndicate has just published my latest column titled “Will Banks and Financial Markets Recover in 2009?” The simple answer to this question is no.
The details can be found in the full text of this column:
From Prospect Magazine:
Earlier this year Prospect teamed up with Foreign Policy to list the world’s 100 greatest living public intellectuals, a contest won (after some sharp-elbowed campaigning) by the Turkish cleric Fetullah Gülen. But who has had the most impact in 2008? We gathered an all-star judging panel (see opposite) from the worlds of policy, media and ideas to find out.
From the Financial Times:
In the buzzy, scruffy warren of offices in New York from which Nouriel Roubini runs his economics aggregration and commentary website, one of the young cyber-serfs has taped a New York Post story about the boss to the chalky wall. “NYU Playboy Warns: Econ Party’s Over”, the sub-heading declares, next to a photograph of a smiling, open-shirted Mr Roubini, sandwiched between two attractive young women.
Roubini, O’Neill See `Severe’ U.S., EU, Japan Recessions New York University Professor Nouriel Roubini and Goldman Sachs Group Inc. Chief Economist Jim O’Neill talk with Bloomberg’s Mark Barton about the outlook for the global economy, interest rates and financial markets in 2009. (Source: Bloomberg)
From the Wall Street Journal:
In a year when major stock indexes, real estate, hedge funds, oil, grains, emerging markets, dollar/yen, long/short hedging strategies (thanks to the short-selling ban), high-yield bonds, bank loans, diversification, and the Super Bowl Indicator failed investors, there were precious few “calls” that worked out well.
Power 2009 – PEOPLE TO WATCH: Nouriel Roubini
For Dr. Doom, a Crash Worthy of His Warnings
By Daniel McGinn | NEWSWEEK
With the economy in a tailspin and the layoff tally climbing, this is a tough time to be a second-year M.B.A. student who’s about to hit the job market. It may be especially tough for the students who gathered in a second-floor classroom at New York University in early December to listen to a lecture on the global economy by their professor, Nouriel Roubini. To start the class, Roubini clicked an overhead screen to show the day’s economic news. “The numbers are awful,” he said, referring to the latest unemployment estimates. He clicked to another piece of data. “That’s as bad as you can get,” he said grimly. For the next 90 minutes, Roubini—clad in a black suit, with tousled dark hair, fingering his reading glasses as he paced the front of the classroom—discussed his 15-point plan for rebuilding the global financial system. The M.B.A.s followed closely and challenged some of his points. Nothing he said should have made them optimistic, but that’s hardly a surprise: there’s a reason Roubini’s nickname is Dr. Doom.
Latest Roubini Interviews With the Financial Times on His 2009 Outlook and The Culprits of the Crisis
From the FT:
Dec 17, 2008: Nouriel Roubini on His Outlook for 2009
Part 1, December 17 2008: Nouriel Roubini, Professor of Economics at Stern School of Business at NYU and chairman of RGE Monitor, expects 2009 to be a year of stagflation and recession for most of the global economic stagflation and recession for most of the global economy. He expects a severe, global recession. Whether or not it persists in 2010 will depend on how aggressive and effective policy actions are: monetary policy and fiscal policy and efforts to recapitalize financial institutions in the US and elsewhere. He believes there could be a return to positive economic growth by 2010. The European Central Bank should follow the Federal Reserve and cut interest rates further. The US needs a plan to reduce the debt burden to US households. The remedies will cost tax payers a lot of money. (click for video)
Interview with U.S News & World Report: “The $700 Billion Bailout Isn’t Enough” and One Third Probability of a Japanese-style L-shaped Stagnation
Luke Mullins of U.S. News & World Report recently interviewed me.
December 18, 2008
I spoke with the bearish—but prescient—economist Nouriel Roubini on Wednesday about what’s in store for the economy, housing, and stock markets in 2009. Here’s what he had to say:
The Fed decision yesterday to cut the Fed Funds range to 0-0.25% formalized the fact that, over the last month, the Fed had already moved to a ZIRP (zero-interest-rate-policy) – as the effective Fed Funds rate was already close to zero -and started a policy of QE (quantitative easing) as its balance sheet has surged over the last few months from $800 billion to over $2 trillion. And – as discussed below – the Fed is now undertaking even more unorthodox policy actions.
These Fed policy actions are occurring while the US and the global economy is now risking a protracted bout of stag-deflation, a disease that I first discussed as early as January 2008 when I warned about the risk of a global deflation and stag-deflation. While it is now fashionable to talk about such deflationary risks – and the latest U.S. CPI figures confirm that we are entering into deflation – some of us were worrying about the coming deflation well before the mainstream – concerned with short-run and unsustainable increases in commodity prices – discovered the deflationary risks in the global economy.
It was clear to those of us that saw early on the risks of a severe US and global recession that, once that recession would emerge, deflationary rather than inflationary pressures would emerge as slack in goods markets, slack in labor markets and slack in commodity markets would emerge. So now we need to worry about stag-deflation, deflation, liquidity traps and debt deflation. Welcome to the world of stag-deflation or, as Krugman would put it, to the world of “depression economics”.
So what is the outlook for the US and the global economy in 2009? And what is the likely policy response to the risks of a global stag-deflation? Let us discuss next these two questions…
Latest Project Syndicate Column: Has Global Stag-Deflation Arrived? …and comment on the Fed ZIRP decision
Project Syndicate has published my latest column on the risks of a global stag-deflation.
The column elaborates on the idea of stag-deflation that I discussed as early as January 2008 when I first warned about the risk of a global deflation and stag-deflation. While it is now fashionable to talk about such deflationary risks – and the US CPI figures today confirm that we are entering into deflation – some of us were worrying about the coming deflation well before the mainstream – concerned with short-run and unsustainable increases in commodity prices – discovered the deflationary risks in the global economy. It was clear to those of us that saw early on the risks of a severe US and global recession that, once that recession would emerge, deflationary rather than inflationary pressures would emerge as slack in goods markets, slack in labor markets and slack in commodity markets would emerge. So now we need to worry about stag-deflation, deflation, liquidity traps and debt deflation. Welcome to the world of stag-deflation or, as Krugman would put it, to the world of “depression economics”.
Here is the text of my column followed by a short comment on the just announced Fed decision to reduce the target for the Fed Funds rate to a 0% to 0.25% range: