Roubini and Bremmer on Global Economic Problems
From The Daily Beast — Roubini and Bremmer debate the real meaning of political and economic problems throughout the world—and whether the U.S. still has power. The latest installment in a continuing conversation.
Ian Bremmer: President Obama entered the White House hoping that intelligent policy management and plenty of good luck would keep foreign-policy crises off his plate for awhile, allowing him to tackle large domestic-policy challenges. In year one, he got his wish. His luck couldn’t have lasted, and it didn’t. Twenty-one months of market meltdown, economic turmoil, and rising global unemployment have created all sorts of second-order political shocks. These aren’t “black swans,” the extremely rare, high-impact events that our mutual friend Nassim Taleb argues are predictable only in retrospect. These are the crises that follow naturally from a massive shock to the system. If we drop a glass on the floor, we can’t predict where every broken piece will land. But we know that somebody better be standing by with a broom…
Nouriel Roubini: Black swans can have silver linings, however. Let’s take some of your points and search for shiny undersides:
• Energy and the Gulf: Obama’s most recent bad luck—presiding over the country during the greatest oil spill in American history—can have positive side effects. That it is a tragedy cannot be doubted. However, it should spur tighter regulation, which was clearly lacking, and a renewed interest in energy efficiency and alternative sources of energy, just when oil prices are sagging and natural incentives would seem to be pushing the other way. Copenhagen’s collapse was not just a failure of political will: It reflected a major change of economic realities (i.e., cheaper oil and “advanced” economies whose main claim to that term seems to be how far they’ve advanced toward bankruptcy)…
All rights reserved, RoubiniGlobalEconomics, LLC
2 Responses to “Roubini and Bremmer on Global Economic Problems”
From above: ‘The bond vigilantes have not woken up in the U.S. as they have in the eurozone, but with yearly fiscal deficits of almost a trillion dollars for the next decade and no political will to address these deficits, something will snap in U.S. bond markets in the next two-three years.’Recent growth came from artificial, badly directed stimulus which depended on the creation of additional debt. As we’re reaching the end of that process (there are limits to everything, even federal debt creation), growth will plunge while debt remains.The result of all this is that we will see a forced shift from ‘borrow, baby, borrow’ to ‘print, baby, print’. US bond vigilantes will wake up finding out that their nightmare was not only a bad dream, but the new reality, the result of bad policy (replacing old debts with new debts without restructuring at cost of those who caused it).
German Chancellor Angela Merkel at the well-succeeded G-20: “We can only spend what we receive in income.”Uh? Geithner can. But don’t ask him to pay back…he’ll not be around at the time.