Roubini: My ‘Perfect Storm’ Is Unfolding Now

Roubini: My ‘Perfect Storm’ Is Unfolding Now
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Wondering how long this economic crisis will last? Drawing down scenarios on who will first drag Europe into a banking meltdown? Unnerved on what to expect from the next US elections and the Paris-Berlin relation? Well, probably you wont have to wait longer. According to Columbia University  Professor, Nouriel Roubini, the quicksands in which the world economy is stranded since 2008 will deepen and result in its complete stall. Unless some exceptional measures and decisions are taken, don’t expect the world economy to recover any soon and here is why according to Pr. Roubini.

CNBC: “Dr. Doom” Nouriel Roubini, says the “perfect storm” scenario he forecast for the global economy earlier this year is unfolding right now as growth slows in the U.S., Europe as well as China.
In May, Roubini predicted four elements – stalling growth in the U.S., debt troubles in Europe, a slowdown in emerging markets, particularly China, and military conflict in Iran – would come together in to create a storm for the global economy in 2013.
“(The) 2013 perfect storm scenario I wrote on months ago is unfolding,” Roubini said on Twitter on Monday.

Chinese inflation data released on Monday, suggested that the economy is cooling faster than expected, while employment data out of the U.S. on Friday indicated that jobs growth was tepid for a fourth straight month in June.
Roubini said that unlike in 2008 when central banks had “policy bullets” to stimulate the global economy, this time around policymakers are “running out of rabbits to pull out of the hat.”

Policy easing moves by the European Central Bank (ECB), Bank of England (BoE) and the People’s Bank of China (PBoC) last week did little to inspire confidence in global stock markets.
“Levitational force of policy easing can only temporarily lift asset prices as gravitational forces of weaker fundamentals dominate over time,” he said.”

“Last week, he told CNBC that there is “virtually zero chance” that pump-priming by central banks will succeed, suggesting that policymakers should instead let the economic bust work itself through the system.”

August 2011 on CNBC: Roubini on slow patch recovery, fiscal drag & perfect storm

In a nutshell, either decision makers let the world economy hit the rock bed leading countries to default, the Eurozone implosion and a second hit on the US economy or just agree on forgiving the massive debts carried by all the stakeholders.

Needless to say that the financial system hates the later and politicians will do anything to prevent the former.

In all the cases, we need to reset the system and it will be painful.

The real question is who will pay the price of this reset?

July 7 (Bloomberg) — New York University Professor Nouriel Roubini discusses “greedy” bankers, the euro-zone crisis and risks facing the global economy in 2013. He speaks in Aix-en-Provence, France, with Bloomberg Television’s Caroline Connan. (Source: Bloomberg)

Source: CNBC
Photo Credits: Nouriel Roubini – World Economic Forum Annual Meeting 2012 By World Economic Forum / FlickR