A Tour Around The World With Doctor Doom

nouriel roubini

Photo: From Nouriel Roubini’s yfrog page

Legendary economist Nouriel Roubini gets paid to travel around the world predicting doom.Seriously, the number of speeches the NYU professor gives is incredible. It’s easy to follow Roubini’s adventures on twitter, because he posts a mobile phone picture from every hotel he stays in.

We’ve tracked down Roubini’s destinations and prophecies from the past three months.

Roubini has a tentatively positive outlook for Germany.

From The Economic Times:

Roubini said growth in all advanced economies, with the possible exception of Germany, would slow due to the end of an inventory-rebuilding cycle, the expiration of large stimulus packages, intensifying fiscal cutbacks, and a higher base effect on growth data. He said despite a second round of quantitative easing, the United States could potentially face a double-dip recession along with Japan and euro zone periphery countries.

Roubini Global Economics names similar problems in Denmark as the rest of Europe:

Despite robust growth in 2010, RGE still expect Denmark's recovery to be gradual with a slowdown in the pace of growth in 2011. The Danish economy will face headwinds from slower export growth, fiscal tightening and a weaker growth contribution from inventory build-up. While fixed investment will return to growth in 2011, household spending will slow. Fiscal consolidation will begin in 2011 and there is a need for large cuts in the coming years to keep public finances on a sustainable path. Monetary policy remains dependent on eurozone interest rates.

Roubini predicted bailouts in Portugal and possibly Spain at a Prague conference.

As for the Czech Republic, Roubini Global Economics predicts severe austerity:

The Czech Republic is a highly export-oriented economy and its fortunes are largely tied to the economies of its key trade partners, particularly Germany. Fiscal austerity measures, including a 10% across-the-board cut to most government operating spending, will weigh on domestic demand in 2011. Although the Czech Republic has Europe's lowest nominal policy rate, we see no ammunition for a hike in the near term and expect the central bank to keep rates unchanged at 0.75% through H1 2011.

Doctor Doom visits ground zero of the debt crisis, taking many pictures of protests with his cell phone.

Roubini Globan Economics says the crisis isn't over:

The recession will continue in 2011 with stabilisation of quarterly GDP growth not likely to occur before early 2012. Competitiveness is only gradually being restored. Eurostat's public debt and deficit revisions reveal the full extent of Greece's unsustainable debt trajectory. In RGE's view, a pre-emptive debt restructuring via exchange offer remains highly likely within the next two years. Rating agencies have taken notice of the new European stabilisation Mechanism's (ESM) preferred creditor status and see Greece as a likely recipient of ESM loans. Further sovereign and bank downgrades will reignite uncertainty and risk aversion in the periphery.

Roubini warns the UK is still vulnerable to a double dip recession. He pens in an editorial soon after:

Certainly, the United Kingdom was playing with fiscal fire and needed some commitment to earlier austerity. But phasing in austerity more gradually, and thus back-loading the adjustment, would have posed less risk to the economy's anemic recovery while maintaining a credible commitment to fiscal consolidation.

Instead, the government could well end up with no plan B in case plan A massively front-loaded austerity leads to a double-dip recession.

Source: The Star

Roubini Global Economics has a bleak outlook for Italy:

The export-led economic upswing will lose momentum in 2011 as the positive impetus from the external sector gradually fades and the recovery in domestic demand fails to accelerate. The outlook for private consumption remains bleak given the ongoing deterioration in the labour market, low consumer confidence, accelerating consumer prices and the government's austerity plan. The implementation of productivity-boosting structural reforms aimed at raising the economy's growth potential remains the key to guaranteeing the sustainability of public finances beyond the short term.

Roubini acknowledges the global recovery, but he warns of a double dip in the developed world AND of overheating in emerging markets.

'Today there is a global economic recovery, but my view is still two-speed. Emerging markets, China, India, Asia, even Latin America are doing well. I think the recovery in the advanced economy is making us apart. There is still balance sheet repair in both the private and public sector. You see this especially in the periphery of the euro zone and Japan, the U.K. is almost double-dipping. Even in the U.S., the recovery is still weak. The banks are doing better of course--they're being built out, they're being recapitalized at least in the United States in the case of the euro zone, but we still have significant problems in Ireland, Spain, and so on.'

Source: The Guardian

Now see how the next crash will happen

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