This morning The Telegraph has posted an interview with Nouriel Roubini: an economist dubbed Dr. Doom in the press because he predicted the credit crisis before most people in 2006. Obviously since then Roubini’s comments have gained a huge amount of credibility, and today he has revealed his assessment of the global economic outlook in 2011. Let’s take a look.
Hope And Pray
Perhaps the most striking part of Roubini’s assessment of the 2011 global economic strategy is that it’s based on blind faith. Regarding the euro zone for instance Roubini comments that indebted member states such as Spain are chiefly dependent on the European Central Bank for financing. Yet he isn’t convinced the ECB can resolve the crisis.
This comment doesn’t place much stock in the decisiveness of EMU officials. For instance on Friday the European Commission is expected to make the EFSF a permanent rescue mechanism for indebted members. This combined with concerted austerity efforts in indebted nations such as Spain and Portugal might be enough to keep EMU members solvent.
No Double Dip Recessions
Roubini is called Doctor Doom in part because (though he was right about the 2008 credit crunch) his predictions are deeply pessimistic. He believes though that 1st world nations that have recently recovered from recession (including the UK and US) will not fall back into recession next year.
This prediction might be a little optimistic. In the UK for instance the Coalition tax cuts have yet to come into effect while this morning unexpectedly high unemployment figures were released. In the US meanwhile President Obama has no strategy for dealing with the astronomical US deficit. In short it’s no time yet to get complacent.
by Peter Lavelle with foreign currency exchange specialist Pure FX.