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Nouriel Roubini's Global EconoMonitor

Washington Post with Bloomberg: Roubini Says Fed, ECB Policy Divide May Be Destabilizing

Bloomberg — Nouriel Roubini, the New York University economist who predicted the financial crisis, talks about the outlook for monetary policy by the Federal Reserve and the European Central Bank. He speaks from Cernobbio, Italy, with Maryam Nemazee on Bloomberg Television’s “The Pulse.” Click for Video:

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One Response to “Washington Post with Bloomberg: Roubini Says Fed, ECB Policy Divide May Be Destabilizing”

economicminorApril 6th, 2011 at 4:53 pm

Nouriel,Your closing statement about business confidence to me is extremely optimistic. Why am I going to increase production or inventory further when there is so little sign of expanding consumer spending. Most growth in credit has been with Student Loans and Autos with very low or no interest. I am surprised there is any confidence left in either the FED or the government policy makers. There shouldn’t be any left about the TBTF institutions who have shown time and time again that they care nothing for either the US or its citizens.Here in the middle I see no good news. Prices of food and energy are a lot higher than they were a year ago with the prospect of going a lot higher. Wages are flat to down. The only group making any headway are at the very top of the economic ladder. There isn’t much trickling down to the working class.In an era of extreme debt overload any additional federal deficit will just contribute to prices rising even faster as all new debt will have to be monetized as more are selling US debt than buying.You and I both know that very little of the QE monies have ended up in the pockets of the working class. Most of it has contributed to rising stock and commodity prices. Oh some has gone to paving over the huge holes in shattered balance sheets but nowhere have I ever read that supporting mal-investment was a beneficial use of resources.Our *leaders* are acting just like the young Marie Antoinette telling her advisors that the masses should just eat cake because there is no bread. It was the lack of affordable bread that brought on the French Revolution as I have read is bringing on the unrest in the middle east. So far the US has food stamps but there is a real divergence between the real cost of food and the allowances given a poor family. It is just a matter of time before unrest erupts here in the US. I see this as a logical outcome of current policies. Let them eat CAKE! Right! Those driving this ship haven’t a clue as to the illness and anger building below deck.From where I sit, I believe that not only will the budget battles be lost and no real reduction be achieved but the FED will institute QE3. The only saving factor may be that the bond vigilantes get their act together and drive up US interest rates and force the hand of Congress and the FED into real cuts. Although that hasn’t worked out so well in Greece or Portugal so far.And even then, the consequences are probably already out of any one’s control. Severe budget cutting will impact the elderly, the homeless and the disadvantaged the most. Even bringing home a lot of our troops will not help because there aren’t any jobs for them and if we can’t afford them as soldiers, what makes anyone think we can afford them as unemployed out of work ex-soldiers?The best answer would probably be a debt jubilee and I have no idea how that would work or work out…I think the world is in for some tough years ahead. The can is getting flatter and harder to kick and there is a semi coming right at it…