If you don’t know who Nouriel Roubini is, he’s the economist who always seems to view issues through a dark lens. And he also always seems to be right.
I’m exaggerating, of course, but not by much. His concerns and predictions over the last few years have been pretty much right on the money.
Late last night American time (early in Europe) he tweeted: “US/EZ/UK sinking in a recession.Issue is no longer double-dip or not: rather whether mild 1 or a severe 1 with a new global financial crisis”
That’s the United States, the United Kingdom, and the Eurozone.
Today there’s an interview with him, which obviously provides more in-depth analysis than his Twitter feed, at Emerging Markets.
From the interview:
In my view there is a high likelihood that there is going to be another global financial crisis. My data suggests that most advanced economies are already entering a recession. Weâ€™re not any more in an anaemic recovery, weâ€™re not any more at stall speed. Weâ€™re at the beginning of a contraction. I think thereâ€™s a contraction already in most of the eurozone, there is a contraction in the US, also in the UK. Thatâ€™s the first point.
The second point is weâ€™re running out of policy bullets â€“ monetary, fiscal â€“ backstopping the financial system.
And third, the eurozone is a source of systemic risk. If there is a disorderly situation in the eurozone itâ€™s going to be worse than Lehman.
Of course, there are other policy bullets, but the political leaders lack the mandate from their citizens to use them.
I’ve been worried about a double dip since before the deep recession ended in 2009 (and I think the National Bureau of Economic Research might have called the end of that too early). In June of this year I wrote: Serious signs of a double dip recession beginning.