Nouriel Roubini's Global EconoMonitor

RGE’s Weekly Roundup

Check out all of the RGE analysis and EconoMonitor contributions that were published this past week at

RGE Analysis:

How to Avoid a Greek Tragedy in Europe by Nouriel Roubini and Arnab Das

Greece is the lynchpin of eurozone sovereign risk. We advise going flat for now. Greece is the debt crisis of the moment, but its problems are far from unique. On their resolution rides the fate of Greece’s neighbors, the eurozone and perhaps the EU itself. Greece, like the rest of the PIGS, has an excessive public debt and fiscal deficit and is uncompetitive. A sovereign debt restructuring that reduces both the debt stock and interest burden and a substantial real exchange rate devaluation would clean up the national balance sheet, restore competitiveness and reinvigorate growth. [Available to RGE Clients Only]

Regulatory Impediments to Ending Japan’s Lost Decade by Mikka Pineda

Even after the end of Japan’s financial crisis of the 1990s, the economy has yet to regain the stratospheric ascendancy it maintained throughout the post-war years, and it continues to punch below its weight. This analysis explores how legal restrictions—combined with demographic change and increased global competition—may be trammeling the Japanese recovery. Regulations in the areas of labor mobility, savings accounts, land use, retail distribution, trade and biotechnology are doing more harm than good, and significant reform is a necessary first step toward truly ending Japan’s lost decade. [Available to RGE Clients Only]


On Nouriel Roubini’s Global EconoMonitor, Nouriel Roubini and Arnab Das look at the economic crisis developing in Europe.  This piece was drawn from a more extensive piece of research available to clients.  Please read Medicine for Europe’s Sinking South.


On the RGE Analyst’s EconoMonitor, Elisa Parisi-Capone, Parul Walia and Arpitha Bykere note that while Obama’s financial and fiscal reform proposals might be a step in the right direction, there just isn’t enough political support to implement aggressive fiscal reforms to address the ticking fiscal bomb.  Please see RGE’s Wednesday Note – Obama’s Recent Regulatory and Fiscal Proposals.

In Thailand’s Ex-PM Thaksin Travelling Too Close for Comfort? Melissa Fabros reports on political disruptions in Thailand, which will influence the economic recovery.


On the Finance & Markets Monitor, Yves Smith and Barry Ritholtz discuss the merits and efficacy of the “Volcker Rule”.  Please read:

Volcker Rule: Dead on Arrival? And is Obama a Lame Duck? by Yves Smith

Volcker Rule Chatter by Barry Ritholtz

In Impulse and Propagation Mechanisms and Regulatory Reform, Joseph Mason argues that the main issue that is being overlooked in the regulatory reform debate is the outdated and problematic housing policy strategies.

In The CEO Pay Slice Lucian Bebchuk, Martijn Cremers, and Urs Peyer advise not only looking into top executives pay, but also how the compensation is divided among top executives.

Also on the Finance & Markets Monitor:

Populism by Simon Johnson

Where’s the Bubble: Stocks or Bonds? by Barry Ritholtz


On the Peterson Institute for International Economics Monitor, Steve Weisman sits down with Howard F. Rosen who argues that exports are a key to U.S. economic recovery, but that export-led growth will require public and private investment.  Please read How the United States Can Become an Export Giant.


On the Global Macro EconoMonitor, Rebecca Wilder looks at unemployment rates and shows that across all regions, labor markets weakened dramatically in 2009.  The labor recovery in Asia and Latin America appears to be fully underway.  The U.S. labor market has stabilized, but the unemployment rate is hovering about 2.2 times over its 2006 average, and there’s no coming down from here until economic growth sticks at a 3.5% pace or so.  Please see Unemployment Rates: U.S. versus the Rest of the Worl.

In Helping Haiti, Thomas Trebat discusses the challenges and the stakes for Haiti’s reconstruction.

Also on the Global Macro EconoMonitor:

Despite Strong GDP Growth Energy Prices Sink Lower by Darrell Delamaide

Global Consumer Confidence is Currently Less than Stellar by Rebecca Wilder

2010: The Short Term Strategic Outlook – Beyond the Statements by Gregory R. Copley


On the U.S. EconoMonitor, James Kwak points out the political challenges of taking on fiscal deficits in a serious manner.  Read Budget Sense and Nonsense.

In Obama Needs to Teach the Public how to Get Out of the Mess We’re in, But He’s Not, Robert Reich is worried that the debate is framed all wrong, and that we need the government to prime the pump by helping state and local governments.

Also on the U.S. EconoMonitor:

Hearts and Minds by Mark Thoma

GDP up 5.7%, Fastest Rate Since 2003 by Edward Harrison


On the Emerging Markets Monitor, Ricardo Hausmann and Ugo Panizza test the theory that the redemption from “original sin,” which describes a situation in which “the domestic currency is not used to borrow abroad or to borrow long-term even domestically,” is one of the reasons for the impressive performance of emerging markets since the 2008 crisis, but they find that original sin has only declined marginally and in a few selected countries.  See Redemption or Abstinence? Original Sin, Currency Mismatches and Counter-Cyclica Policies in the New Millennium.

In Stiglitz’s New Book and the Developing Countries, Otaviano Canuto discusses the fact that developing countries suffered a smaller fallout from the financial crisis than had been initially feared mainly as a result of prudent macroeconomic policies, while the developed world engaged in activities that were textbook mistakes.


On the Asia EconoMonitor, Michael Pettis and Edward Harrison respond to headlines made by hedge fund manager Jim Chanos who claims that China is undergoing a speculative bubble that makes it the equivalent of “Dubai times 1,000 – or worse”.  Pettis provides historical references where countries have run up foreign reserves similar in magnitude to that of China and it did not turn out well for long investors.  Harrison points out that the bubble doesn’t mean the economy will collapse, but at a minimum, it will be very negative for companies leveraged to capital investment once the bubble bursts.  Please read:

Never Short a Country with $2Trillion in Reserves? by Michael Pettis

Chanos: “We’re Not Calling for an Impending Crash of China” by Edward Harrison


On the Latin America EconoMonitor, Jeffrey Frankel considers the valuable lessons to be learned from Chile’s fiscal policy, which is effectively governed by a set of rules thanks to policy decisions made by the Bachelet government and previously established institutions.  Read Achieving Long-Term Fiscal Discipline: A Lesson from Chile.

In A New Latin American Boom Seems to be Starting but it will be Plagued with Risks Eduardo Lora notes that the recovery of the world economy will be very unbalanced leading to economic and political risks.

Also on the Latin America EconoMonitor,

Some Thoughts on Haiti’s Suffering and Courage by Eugenio Diaz-Bonilla

Mexico – 2010 State and Local Elections: Relevance, Current Dynamics by Alejandro Schtulmann


On the Europe EconoMonitor, Edward Hugh provides his analysis on where we stand with the current economic crisis in Europe, while Marek Belka looks at the countries to the East who are still outside the EMU, but are set to join in the future and asks, “should they accelerate or delay their application and what are the conditions for success, once they have gained entry?”  Please read:

After Greece, and Portugal, Does Spain Come Next? by Edward Hugh

Greek Bailout News (1) by Edward Hugh

Getting Ready to Join the Eurozone Club by Marek Belka

13 Responses to “RGE’s Weekly Roundup”

PeterJBFebruary 5th, 2010 at 6:11 pm

A vision came to my mind:I am reminded of that elderly gentleman that was assisted that cold and wet evening, by his eager helpers, presumably relatives, onto the stage under the promise of a gift, a free gift that would cure his ailment that had left him in crutches and wheelchair for the past 20 years or so. His body had broken down with almost every imaginable disease known to man and he had taken almost every cure imaginable to the body medical, and more.As he stood there propped up between his guardians, the bringer of the word, the bringer of the light, that prophet of the faith, the apostle of the Lord brought his focus of gaze on the poor broken creature who, had beaten the track to the door of this, the messenger who promised the great cure. The words of harmonic resonance echoed out into the crowd, all of whom had gathered to surrender their all in exchange for the promised “Word of God”; out, the voice rang as if from God itself, into the microphones, the cameras and indeed, across the atmosphere and into the airwaves of an entire Nation. “Lord, through my ever so humble hands, grant this poor man, Your servant, your faithful servant, Your love and make him whole again… Thank You Lord”. “Amen”, the crowd roared; eyes rolled, people fainted and many screamed as the “Servant of the Lord” directed that the crutches that held this old man be removed.There was then absolute silence as the Nation fixed their eyes on the crippled old man… and then,nothing else was heard but the sound of a frail human body collapsing in a resounding heap on the stage floor. It was indeed, a profound moment.The moral of this story?When the integrity of the structure is shot, and all its organizations rotted to the core, it is sheer insanity to expect a free lunch!Keywords: “leadership” | faith | insanity | free | integrity | profound |Ho hum

blindmanFebruary 5th, 2010 at 7:24 pm

looking for signs.. of life…On The Road(Live version, 1997. Also known as: Home I’ll Never Be)I left New York nineteen forty-nineTo go across the country, without a dad-blame dime(1)Montana in the cold cold fallFound my father in a gamblin’ hallFather, father, where have you been?I’ve been in the world since I was only ten’Don’t worry about me, I’m about to die of the pleurisyCross the Mississippi, cross the TennesseeCross the Niagara, home I’ll never beHome in old Medora, home in ol’ Truckee(2)Apalachicola, home I’ll never beBetter or for worse, and thick and thinWell, I’ve been married to the little womanGod loved me, just like I loved himI want you to do just the same for himOh, the worms eat awayBut don’t worry, watch the windOh, the worms eat awayBut don’t worry, watch the windOh, the worms eat awayBut don’t worry, watch the windSo I left Montana on an old freight trainThe night my father died in the cold cold rainRode to Opelousas, rode to Wounded KneeRode to Ogallala, home I’ll never beHome in old Medora, home in ol’ TruckeeApalachicola, home I’ll never beHome I’ll never beHome I’ll never beWritten by: Jack Kerouac(5). waits..i have to notice the chorus has been altered as…’ oh the worms eat away butthe worry warts will win,oh the worms eat away butthe worry warts will win.oh the worms eat away butthe worry warts will win. ‘.or this. what its worth. “home” as the external/internal, emotional, womb, in rationallinear time, emotionally related to relationship and the mind,symbolically coded in language. home, womb, tomb, room. family.legacy in debt. or simply, no one ever owns anything, (but the bankers visa vi the government sponsor) theirown womb included, as we have lost the sacred, self. the religiouswe have in abundance. con-forming. good has been said… “your mileage will vary”. ..

PeterJBFebruary 6th, 2010 at 12:09 am

And then, and then, and then the whirring of Pope Ben’s printing machine er, heard again:”The Federal Reserve would consider reopening its program to support the mortgage market if interest rates spiked or the economy showed new weakness, Federal Reserve Bank of New York President William C. Dudley said in two new interviews.””The golden truth is that the Fed is going to be forced to embark on a money printing operation that will blow our minds. It will be interesting to see what kind of smoke screens they put up in order to mask the truth. At some point this nasty short-squeeze rally in the dollar will rip in reverse and the rest of the world will flee from the dollar the way they are fleeing from the euro right now. “ economics is really great entertainment, er, for some.Ho hum

PeterJBFebruary 6th, 2010 at 3:24 am

I,- “Fear the Boom and Bust” a Hayek vs. Keynes Rap Anthem -can’t watch this because in Australia we only are allowed to pretend that we have Internet (it’s a political thing to do with Hanlon’s Razor):Search U-Tube but the message arrives from the Mises Institute, where a review can be found and it sounds realistic.Ho hum

PeterJBFebruary 6th, 2010 at 4:40 pm

Thank you blindmanI did indeed view this excellent production to which I comment that those of the production understand that which they produced.The production is also a great as the Mises Institute article (arrived via email subscription) opined.Thank you againHo hum

PeterJBFebruary 6th, 2010 at 6:40 pm

Speaking of “excellence”, “growth”, “recovery” and all things wondrous er, at the hands of “leadership”, of course:”Society has a very serious problem of playing pretend. Pretend deficits don’t matter, pretend the challenged can keep up, pretend the smart aren’t dumbed down, pretend rewarding failure creates success, pretend globalism works, pretend banks are solvent, pretend jobs don’t matter, pretend unemployment is under 10%, pretend the market is sound, pretend Capital Hill listens to their constituents, pretend campaign donations aren’t bribes, pretend the US hasn’t gone corporatist, pretend the economy has recovered…pretend, pretend, pretend.”MISH:>Bankrupt Education SystemKeywords: pretend | blank | pretend | and, it ain’t just the Education System | pretend | incompetence | ineptitude | just plain stupid | Occam’s Razor | pretend | pretend that faith-based economics manipulated for bankrupt individuals is not causal | pretend that the taxpayers are not paying for the losses of the “experts” | pretend that the taxpayers are not bank-rolling the “boys” | pretend that “leadership” knows something worth knowing | pretend|Ho hum

PeterJBFebruary 6th, 2010 at 6:49 pm

And, speaking of vulture droids and their avatars:”The Supreme Court did not even try that case to grant corporate personhood – the reason corporations now have 14th Amendment protections is because of a statement made by Chief Justice Waite: “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.” hum

PeterJBFebruary 6th, 2010 at 7:50 pm

Anything new here?:”As a trickle-down apologist for high finance, Prof. Bernanke has drawn systematically wrong conclusions as to the causes of the Great Depression. The ideological prejudice behind his view is of course what got him his job in the first place, for as numerous observers have quipped, a precondition for being hired as Fed Chairman is that one does not understand how the financial system actually works. Instead of recognizing that deepening debt, low wages and the siphoning up of wealth to the top of the economic pyramid were primary causes of the Depression, Prof. Bernanke attributes the main problem simply to a lack of liquidity, causing low prices.”The Bernanke Reappointment: Be Afraid, Very AfraidBy Prof Michael Hudson I put it to the readers of this Blog, that Benanke’s reappointment represents the total lack of understanding of just about everything socio-economics; well, everything important and fundamental to the governance of a Nation and their personal mandates, anyway, by both Congressmen /Senators and er, women in both instances, respectfully.Ho hum