Economist Nouriel Roubini appeared on CNBC today, predicting continued stress on advanced economies as the “painful deleveraging process” continues.
He focused on three major points:
First, Roubini downplayed European measures to stem the crisis so far, accusing the fiscal compact and austerity measures of aggravating the economic and political stability in the short term:
“We need growth in the eurozone. We cannot just talk about austerity because without growth that would be unsustainable. If gdp keeps on falling and without economic growth, the social and political backlash against austerity is going to become overwhelming. Strikes, demonstrations, weak governments, and eventually failing governments.”
The same goes for liquidity measures that have stemmed short-term banking pressures in the short term, and even produced positive economic data in the U.S.:
“This painful problem of deleveraging is going to continue … You cannot resolve the fundamental problems with liquidity. You can just kick the can down the road with liquidity, but you can’t resolve those fundamental problems.”
By the way, concerns over oil won’t go away any time soon:
“This tension is going to rise throughout the year, there are going to be more sanctions, negotiations are going to fail, and it’s not just the Israel-Iran issue. Look what’s happening in the Middle East.”
Hear about more of his worries and watch the full video from CNBC below:
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