Roubini predicts a slow, anemic, U-shaped recovery because of weak labor markets, re-leveraging of the public sector, massive excess capacity and low capital expenditure. But he also fears a rising global asset bubble. Nouriel Roubini is in Davos where he commented the economic situation, financial markets and the fiscal situation:
"On monetary policy, exiting too soon is going to tip the economies into recession; the trouble is… now there is the beginning of an asset bubble that's becoming global.
The good news is there is a beginning of an economic recovery. The question is what's going to be the shape of the recovery.
In the US, gross domestic growth is likely to be stronger in the first half of the year than in the second half, when the stimulus will fizzle out. I don't think we're going to retest the lows of last March. I see only a correction happening in the second half of the year. The risk is that the policy stimulus is going to fizzle out in the second half of next year and it will become a drag on growth."
He is also fearful of fiscal problems at the state level in the United States, particularly in California:
"I'd point out that in the US you have also fiscal problems at state level, a state like California is virtually bankrupt."
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2 comments:
Ridiculed as he often has been and wrong as he has sometimes been, esp. if he tried to make predictions not about what but also WHEN, hs warnings are to be heeded ... Economic Fallacy II: Speculation is Harmful?
Worst timer in market history!
But gets the big picture pretty well.
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