Ladies and gentleman, may we present EXHIBIT A in why Nouriel Roubini is the pre-eminent Dr. Doom, and all of the other doomsayers play second fiddle.
Check out this paragraph from his latest Forbes op-ed about the ongoing risks to the economy.
With growth nearly stalled, an unstable disequilibrium arises that is likely to tip the economy into a double-dip recession. The unemployment rate climbs, the budget deficit widens because of automatic stabilizers, home prices keep falling, bank losses are much larger and protectionist pressures come to a boil. Stock markets could sharply correct, and credit and interbank spreads could widen as risk aversion increases. A negative feedback loop between the real economy and the financial system could easily tip the economy into a formal double dip: The real economy reaches a near-stall speed and risky asset prices correct downward, leading to a negative wealth effect, a higher cost of capital and reduced business, consumer and investor confidence.
We’ve read that like 5 times, and we’re still not sure exactly what it all means, except that with terms like “unstable disequilibrium” and “negative feedback loop” and “formal double dip” it sounds pretty horrible.
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