Nouriel Roubini's Global EconoMonitor

Professor Nouriel Roubini Tips 50pc Chance of Another Recession – Summary of My Speech in Perth

From Perth Now:

THE economist known as “Dr Doom” has tipped a more than 50 per cent chance of another global recession that could force the break-up of the eurozone.

Professor Nouriel Roubini spelled out for delegates at the Commonwealth Business Forum in Perth today there were potential positive and negative impacts stemming from the current global financial turbulence and uncertainty surrounding the Eurozone.

Specifically, he suggested there was a “significant probability” of a double dip recession engulfing most advanced economies around the world, stemming from unresolved issues in Europe.

“In my view, there’s a significant probability – more than 50 per cent – that over the next 12 months, there’s going to be another recession in most advanced economies,” the New York University professor said.

“If we look at the situation in the United States, in the Eurozone and in the United Kingdom, the chances of another recession are significant.

“Whether you call it a double dip recession, or a cultivation of the first recession or a second recession it doesn’t matter – it’s semantic.”

Professor Roubini also suggested there could be disorderly defaults and, in turn, a disorderly break up of the Eurozone

“If we’re asking ourselves whether the recession in advanced economies is going to be mild or whether it will be severe…the answer very much depends on what happens in the Eurozone,” he explained.

“If the Eurozone is able to control its own crisis, the recession will be relatively mild.

“But if the situation in the Eurozone becomes disorderly, with defaults by a number of countries, and [there is ] a disorderly exit of a number of members of the Eurozone, and eventually a break up, that shock could be as large, if not larger, than the disorderly collapse of Lehmann [Brothers] in the fall of 2008.”

He also mooted a “hard landing” for China’s economy in the not too distant future because of its “unsustainable model” based on significant over investment, which he said now makes up almost 50 per cent of the nation’s GDP.

“Over investment booms during the last 60 years have resulted in a hard landing for that economy,” he said.

He added that China’s massive growth will stall by 2013-14, increasing the chances of a hard landing.

Two rounds of thunderous applause greeted Professor Roubini at the close of his 45 minute presentation to the diverse corporate audience on the first day of the Commonwealth Business Forum.

Mining magnate Gina Rinehart and well-regarded deal-maker and Commonwealth Business Council member, Mark Barnaba were among the throng of business-minded attendees listening attentively to the speech from the man who predicted the global financial crisis two years prior to the fallout.

Even Dr Mohan Kaul, the boss of the Commonwealth Business Council which oversees the Forum, was impressed by the quality of Professor Roubini’s interpretation and forecast of global economic factors.

“Wow,” Dr Kaul said.

“What a speech!”

One member of the audience who wished to remain unidentified said he was blown away by the pace at which the economist delivered his dire predictions.

“He hardly even took a breath,” he said.

4 Responses to “Professor Nouriel Roubini Tips 50pc Chance of Another Recession – Summary of My Speech in Perth”

demandsideforecastOctober 25th, 2011 at 4:39 pm

Roubini has been so right so often, and he is right again. The wonder is that he gets so much debate and so little hearing from the orthodox wing of economists and from policy-makers. Can you imagine the difference had the Greek crisis been handled in an aggressive and orderly way?

margsviewNovember 1st, 2011 at 4:58 am

Interesting definitely but it sounds like all are swimming around the big garbage whirlpool in the Pacific; when no one will deal with the mass of Credit Default Swaps. The problem is huge so why with this slue are banks not forced to show real accountable figures of the amounts they carry and the degree they can be valued? It will all come out in time, now does that mean slowly where we are constantly battered or do leaders and bankers finally have to behave like main street does and dig into their deep pockets. Europe appears to be the first test case, lets hope shock and awe is better than—–not again.

IomoioNovember 5th, 2011 at 2:30 am

Pretty impressive article. I just came across your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I’ll be coming back and I hope you post again soon.

jonathanJuly 6th, 2012 at 8:14 am

brilliant analysis, written without the aid of rose tinted specs.
I can clearly see things going downhill -and the biggest worry is that politicians worldwide dont know what to do to stop this contagion.