Roubini and El-Erian on CNBC’s Squawk Box: Double Dip Risk, Growth vs. Fiscal Consolidation, Future of the Eurozone
CNBC.com — Double Dip Risk is Rising in the Eurozone
The risk of a double-dip recession is growing, especially in the euro zone, where restructuring Greece’s debt is inevitable, famous economist Nouriel Roubini told CNBC Tuesday.
Moody’s became the second major agency to cut Greece’s debt ratings to “junk” late on Monday, as it admitted that the country does not face immediate liquidity problems due to a joint IMF/EU aid package, but that the austerity program will probably weigh on its economic growth prospects.
“I would say that the risk of a double-dip recession is highest in the euro zone… I would say there is a more than 50 percent probability,” if not of a technical double-dip then of economic stagnation in the area, Roubini said.
“The downside risk to growth is significant so taking stimulus away now is a huge mistake,” he warned.
There will be “massive deleveraging” of the consumer and of the private sector in the euro zone and in the UK, according to Roubini.
“What we have to do is avoid a double-dip recession,” because authorities will not be able to fight it this time, he said. “The trouble is if there is a double dip there won’t be the policy bullets.”
Greece should restructure its debt “in an orderly manner” because even with the EU/IMF help it will not be able to shake off the burden of debt, Roubini said.
“Take Greece, even if they follow the IMF program… their public debt is going to stabilize at 145 percent debt to gross domestic product. What joke is that?”
Spain Is Worse?
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3 Responses to “Roubini and El-Erian on CNBC’s Squawk Box: Double Dip Risk, Growth vs. Fiscal Consolidation, Future of the Eurozone”
Mr. Roubini is trying very very hard, thank you professor. but we can expect the much needed international concerted actions to be nato – no action talk only…i think, what the haven is going on…now, we have come to realized, the crisis was bred up in capitalism (the mother), which is supposed to bring everybody vast opportunities for prosperity…and now, people are unable to cooperate with each other to work effectively on possible solutions, because everybody/nations has the right to democracy (the father), which is supposed to ensure everyone equality and freedom…what the haven is going on, i think…mankind has come a long way, struggling out of slavery and feudalism, building intelligent systems and wealth…now, it looks like, people are trapped in their own mind…
A not very long time ago, in a galaxy known as the Milky Way, the member of an occult group of sinister individuals warned that should this group ever get to a point where it believed it could fix fiscal problems through printing money, this would present “a paramount risk to the long-term welfare of the U.S. economy.” The group is better known as the Federal Reserve and the individual was Dallas Fed president Richard Fisher. The same Richard Fisher, who recently wrote about the FinReg unaddressed concept of how Too Big To Fail will lead to another massive systemic crash, went as far as saying that “even the perception that the Fed is pursuing a cheap-money strategy to accommodate fiscal burdens” would be disastrous, and that “the Federal Reserve will never let this happen. It is not an option. Ever. Period.” Boy, was he wrong. Nonetheless, Fisher’s speech from May 28, 2008 before the Commonwealth Club of California, should be read by all Keynesian fanatics as it is without doubt one of the most lucid presentations of rational thought from the ranks of the Fed. With observations such as that “we know from centuries of evidence in countless economies, from ancient Rome to today’s Zimbabwe, that running the printing press to pay off today’s bills leads to much worse problems later on”, one may only hope that all those who advocate even more rampant spending and irresponsible money printing to “fix” the economy, will finally see the light. Alas, mired in their own stupidity, they won’t. And Fisher’s words, so prescient in 2008, yet so ignored, will suffer the same fate today, and the Fed will continue on its way to singlehandedly destroying this once great country.http://www.zerohedge.com/
It’s all over except for the “weeping, wailing and gnashing of teeth”…Darwin Awards ComethBack to all cash folks!