ROUBINI sur la bataille des monnaies

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Fwd: Macroperu Se extiende la crisis mundial

    

 

Monday, June 13, 2011

Roubini Says 'Perfect Storm' May Threaten Global Economy

A "perfect storm" of fiscal woe in the U.S., a slowdown in China, European debt restructuring and stagnation in Japan may converge on the global economy, New York University professor Nouriel Roubini said.

There's a one-in-three chance the factors will combine to stunt growth from 2013, Roubini said in a June 11 interview in Singapore. Other possible outcomes are "anemic but OK" global growth or an "optimistic" scenario in which the expansion improves.

"There are already elements of fragility," he said. "Everybody's kicking the can down the road of too much public and private debt. The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest."

Elevated U.S. unemployment, a surge in oil and food prices, rising interest rates in Asia and trade disruption from Japan's record earthquake threaten to sap the world economy. Stocks worldwide have lost more than $3.3 trillion since the beginning of May, and Roubini said financial markets by the middle of next year could start worrying about a convergence of risks in 2013.

The MSCI AC World Index has tumbled 4.9 percent this month on concern recent data, including an increase in the U.S. unemployment rate to 9.1 percent in May, signal the global economy is losing steam. U.S. Treasuries rose last week, pushing two-year note yields down for a ninth week in the longest stretch of decreases since February 2008, on bets the Federal Reserve will maintain monetary stimulus.

Bond Market 'Revolt'

World expansion may slow in the second half of 2011 as "the deleveraging process continues," fiscal stimulus is withdrawn and confidence ebbs, Roubini also said.

Easing growth may spur demand for dollar assets as a "safe haven," he said in response to questions after a speech in Singapore today. The Dollar Index, which gauges the U.S. currency's value against a basket of six counterparts including the euro, yen and British pound, rose 0.1 percent as of 11:35 a.m. in Singapore, bound for a fourth straight daily increase.

Roubini is among analysts who predicted the global financial crisis of 2007-2009 that was triggered by a collapse in the value of U.S. mortgage securities.

Some of his other predictions haven't panned out, including his call on July 4, 2010, for "market surprises on the downside" in ensuing months and a weakening in economic growth. The MSCI World Index rallied 23 percent in the second half of last year, while U.S. gross domestic product gains accelerated to 2.6 percent in the third quarter and 3.1 percent in the fourth quarter from 1.7 percent in the April-to-June period.
U.S. Bonds

Roubini said two days ago that in the U.S., a failure to address the budget deficit risks a bond market "revolt." President Barack Obama's administration has been negotiating with Republicans, who control the House of Representatives, over cutting the federal government's long-term shortfall and raising the debt ceiling.

"We're still running over a trillion-dollar budget deficit this year, next year and most likely in 2013," Roubini said in a speech in Singapore on June 11. "The risk is at some point, the bond market vigilantes are going to wake up in the U.S., like they did in Europe, pushing interest rates higher and crowding out the recovery."
In Europe, officials need to restructure the debt of Greece, Ireland and Portugal, and waiting too long may result in a "more disorderly" process, Roubini also said.

European officials are racing to find a plan to stem Greece's debt crisis by June 24 while sharing the cost of a new rescue with bondholders. Saddled with the euro area's heaviest debt load, Greece is seeking additional loans after last year's 110 billion-euro ($159 billion) bailout.
Japan's Contraction

Japan's economy, the world's third-largest, slid into a recession last quarter, using the textbook definition of consecutive quarterly declines in GDP, after the March 11 earthquake and tsunami and ensuing nuclear crisis. The government is spending an initial 4 trillion yen ($50 billion) to clean up from the disaster, which is estimated to have caused as much as 25 trillion yen in economic damage.

Bank of Japan Governor Masaaki Shirakawa said on June 1 that supply constraints are easing faster than expected as companies rush to repair their facilities. The risk in Japan is "if growth fizzles out after a short-term reconstruction stimulus," leading to a renewed struggle to maintain expansion around 2013, Roubini said.

China's economy may face a "hard landing" after 2013 as government efforts to boost growth through investment cause excess capacity, Roubini told reporters after his June 11 speech.

'Overcapacity' in China

"China is now relying increasingly not just on net exports but on fixed investment" which has climbed to about 50 percent of GDP, he said. "Down the line, you are going to have two problems: a massive non-performing loan problem in the banking system and a massive amount of overcapacity is going to lead to a hard landing."

A record $2.7 trillion of loans were extended in China over two years, pushing property prices to all-time highs even as authorities set price ceilings, demanded higher deposits and limited second-home purchases.
The nation's current challenge is to maintain growth and curb price gains ahead of a leadership change next year, Roubini said. Officials may use administrative steps and price controls, as well as raising rates further and allowing currency appreciation, if inflation becomes a bigger problem, he said.

Political Transition

"The policy challenge through next year, where you have a delicate political transition of the leadership, is to maintain growth in the 8 to 9 percent range while pushing inflation below what it is right now," said Roubini, the co-founder and chairman of New York-based Roubini Global Economics LLC.

After next year, the bigger challenge in China is "to reduce fixed investment and savings and increase consumption. Otherwise after 2013, there will be a hard landing," he said.

The risk of "outright" deflation and the probability of another recession in the U.S. are lower now than a year ago, and output in Japan could rebound in the second half of the year, Roubini said two days ago. "High-grade" corporations have "very strong" balance sheets, he said.

Roubini in July 2006 predicted a "catastrophic" global financial meltdown that central bankers would be unable to prevent. The collapse of Lehman Brothers Holdings Inc. in 2008 sparked turmoil that led to the worst financial crisis since the 1930s.

  

           
       

 

 

Roubini: "La tormenta perfecta que pronostiqué a principios de año se está desarrollando"

Al comentario de Roubini habría que agregar los siguientes elemnetos. En primer lugar,  el índice de precios al consumidor descienden en Lima y sus exportaciones , también. La deflación en China impacta sobre el las exportaciones de los países asiaticos . Conocemos que las orordenes de exportacion de Japón rxperimentaron un caidad de 10 por ciento el mes pasado.  En segundo lugar, desarrollos negativos por el lado de la oferta. Es  probable que la ola de calor en USA se transforme en una Sequía . Como USA esm uno de los principales productores de grano en el Mundo, la sequ{ia auemntara el precio del maiz , trigo,y soya.  Aumento en el precio del petróleo y III Guerra en el golfo. 

El economista y académico de la Universidad de Nueva York,además no descartó que otros países, como Finlandia, salgan antes que Grecia del euro.
  09/07/2012 - 15:56

 

El economista y académico de la Universidad de Nueva York, Nouriel Roubini, advirtió hoy que la 'tormenta perfecta' que pronosticó a principios de año para la economía global se está desarrollando en estos momentos, como demuestra la desaceleración de Estados Unidos, Europa y China, informó Diario Expansión.

El pasado mes de mayo Roubini pronosticó cuatro escenarios que crearían una 'tormenta perfecta' en la economía global: el estancamiento de Estados Unidos, un repunte en los problemas de deuda de Europa, la desaceleración de las economías emergentes, especialmente China, y el conflicto militar en Irán.

Según el economista, los datos de inflación que ha publicado hoy China indican que la economía del gigante asiático se está enfriando más rápido de lo previsto, mientras que Estados Unidos anunciaba el viernes pasado unas decepcionantes cifras de empleo, acumulando ya cuatro meses seguidos con datos inferiores a los previstos.

Ante este escenario, Roubini publicó esta mañana en su cuenta de Twitter que "la tormenta perfecta para 2013 que dibujé hace meses se está desencadenando".

Para el economista, en estos momentos el problema está en que los Estados soberanos se están quedando si opciones o cómo dijo el propio Roubini meses atrás, ya no tienen "conejos que sacar de la chistera". Mientras la crisis de 2008 se pudo combatir con una acción conjunta de los bancos centrales, actualmente las decisiones adoptadas por los reguladores –por ejemplo la bajada de tipos que aplicaron la semana pasada el BCE y sus homólogos chino y británico-, no han tenido el efecto deseado.

FINLANDIA SALDRA DEL EURO ANTES QUE GRECIA

En declaraciones a Bloomberg TV, el economista también ha hablado sobre la situación por la que atraviesa la zona euro y los graves problemas a los que se enfrentan algunos de sus países miembros. En esta ocasión Roubini no señala a Grecia, sino a Finlandia. Según el economista el país nórdico saldrá del euro antes que los helenos.

Roubini ha calificado de "fracaso" la cumbre que mantuvieron hace unas semanas los líderes europeos "porque las rentabilidades de los bonos de España e Italia siguen altas". En su opinión, "vamos a ver nuevas crisis de deuda en los próximos días. Los mercados esperaban algo más como la mutualización o la monetarización de la deuda".

No obstante, el economista advierte de que "el problema es que ya no es solo Angela Merkel y Alemania, ni Finlandia ni Austria ni los Países Bajos quieren mutualizar la deuda de la Eurozona". Su previsión es que en 2013 "veremos una salida de Grecia del euro", pero "no hay que descartar que algunos países del corazón de Europa, como Finlandia, abandonen antes que Grecia".

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Fwd: Macroperu La Nueva Coyuntura Mundial: Tres Desarrollos Críticos

 La Nueva Coyuntura Mundial: Tres Desarrollos Críticos
To: MacroPeru@yahoogroups.com

 

Estimados Amigos,

                                     En una reciente entrevista de Roubini se mencionaran las tres fuerzas que regirán la dinámica muncial en el más inmediato futuro: (1) la escasez de energía y el dterioro de las condiciones ambientales de la producción ; (2) la crisis política en el mundo {arabe; (3) el colapso de euro  y de la UE; (4) el rproblema de la sobreacumulación d ecapital en China ; (5) la crisis  distrubutiva en Estados Unidos y la UE .  Les recomiendo escuhar la entrevista . 

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ROUBINI MIRADA DE AL EN RGE 360

 

 

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Friday, December 3

• UN holds Climate Change Conference in Cancun, Mexico (November 29-December 10). (Cancun Conference: High Hopes for Small Victories)
• U.S. reports employment situation for November. (U.S. Private Payrolls Rise, Continuing Recent Labor Market Improvement)
• Canada reports unemployment rate for November. (Canadian Labor Market Continues to Moderate in October)
• EZ: ECB president Jean Claude Trichet gives speech on European economy. (Prospect of ECB Intervention Fuels Relief Rally in Eurozone)
• UK, EZ, Germany, France and Italy release services PMIs for November. (UK Q3 Growth Unrevised at 0.8% q/q; What Is the Outlook?)
• Switzerland reports November CPI. (Swiss National Bank Maintains Expansionary Monetary Policy, Lowers Growth Outlook)
• Malaysia reports trade balance for October. (Malaysian Export Growth Continues to Slow in September on Weak Electronics Demand)
• Colombia releases monetary policy meeting minutes. (What Is the Probability that Colombia's Central Bank Will Cut Rates?)
• Mexico reports consumer confidence for November. (How Fast Will Mexico's Economy Decelerate in H2 2010? What About 2011?)

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Saturday, November 4

• Colombia reports November CPI. (What Is the Inflation Outlook for Colombia in 2010?)

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Sunday, December 5

• Egypt holds stage two of parliamentary elections. (Egypt's Election—Free and Fair?)

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Monday, December 6

• Russia reports November CPI (December 6-7). (Food Prices Drive Russian Inflation)
• Australia holds monetary policy meeting for December. (Are Higher Terms of Trade Leading the Reserve Bank of Australia to Raise Rates?)
• The Philippines reports November CPI. (Will Philippine Inflation Remain Tame?)
• Chile reports economic activity for October. (Chile's Economic Activity: How Strong Will the Recovery Be?)
• Ecuador reports November CPI. (What Is the Outlook for the Ecuadorian Economy?)

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Tuesday, December 7

• The EU and Russia hold summit meeting in Brussels, Belgium. (Can EU-Russia Ties Shift From Energy Focus to Modernization?)
• Canada announces monetary policy decision. (How Long Will the Bank of Canada Remain on Hold?)
• UK reports industrial and manufacturing production for October. (UK Q3 Growth Unrevised at 0.8% q/q; What Is the Outlook?)
• Germany reports factory orders for October. (German Industrial Production Gives Further Evidence of Slowing Economic Activity)
• Iceland reports Q3 GDP. (Iceland's Economy Still in Deep Recession)
• Taiwan releases export data for November. (Taiwan's Export Growth Rebounds in October)
• Chile reports November CPI, trade balance. (Chile's Economic Activity: How Strong Will the Recovery Be? and Chile's External Accounts: Any Improvement?)

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Wednesday, December 8

• Canada reports housing starts for November. (Do Vulnerabilities Loom as Canadian Housing Begins to Cool?)
• Germany reports current account, trade balance and industrial production for October. (German Exports Post Strong Growth in September, Slowdown Ahead and German Industrial Production Gives Further Evidence of Slowing Economic Activity)
• Belgium reports final Q3 GDP. (Belgium GDP Growth Decelerates to 0.5% q/q in Q3 2010)
• New Zealand holds monetary policy meeting for December. (How Much Will the Reserve Bank of New Zealand Tighten in 2010?)
• South Korea holds monetary policy meeting for December. (South Korea Hikes Rates in November as Inflation Risks Outweigh Capital Inflow Challenges)
• Malaysia reports industrial production for October. (Malaysia's IP Growth Shows Slight Increase on Favorable Base Effects)
• Mexico reports trade balance for October. (Are Mexico's External Accounts Improving? What About Export Diversification?)
• Brazil announces reference rate target, reports IPCA inflation for November. (Will Brazil Resume Tightening in 2011? and How Long Will Brazil's Inflation Outlook Keep on Deteriorating?)

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Thursday, December 9

• Canada releases New Housing Price Index for October. (Do Vulnerabilities Loom as Canadian Housing Begins to Cool?)
• UK announces monetary policy decision. (UK Quantitative Easing: When and How Much?)
• EZ: ECB publishes monthly report on economic situation. (Post-2013 European Stabilization Mechanism: Collective Action Clauses and Preferred Creditor Status)
• Various European countries report final Q3 GDP. (Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Portugal)
• Finland reports Q3 GDP. (Finland Macro View: GDP Growth at 1.9% q/q in Q2 2010)
• Germany reports final November CPI. (Germany: Inflation Reaches Highest Level Since October 2008)
• Czech Republic reports November CPI. (Czech Central Bank Has Europe's Lowest Nominal Policy Rate—Will It Last?)
• China releases trade data for November. (Chinese Trade Surplus Swells in October)
• Brazil reports Q3 GDP. (How Fast Is Brazil Decelerating in H2 2010? What About 2011?)
• Mexico reports consumer prices for November. (Will Mexico's Inflation Remain Benign in H2 2010? What About 2011?)
• Peru announces reference rate for December. (When Will the Peruvian Central Bank Resume Monetary Tightening?)
• Egypt reports November CPI. (Egypt's Inflation Remains Unchanged in October: Is Up the Only Way to Go?)
• South Africa reports current account for Q3. (South Africa's Current Account Narrows in Q2 2010 and South Africa's Trade Balance Sinks Back to Deficit in October)

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Friday, December 10

• The EU and India hold summit meeting in Brussels, Belgium. (Will India and the EU Expands Economic Cooperation)
• U.S. reports international trade for October. (U.S. Trade Deficit Narrows in September)
• Canada reports international merchandise trade for October. (Canada's Current Account Deficit Widens Further in Q3)
• Italy reports final Q3 GDP, trade data. (Italy: Q3 GDP Growth Disappoints at 0.2% q/q and Will Exports Continue to Drive Italy's Economic Recovery?)
• Turkey reports Q3 GDP. (Turkey Macro View: Double-Digit GDP Growth in Q2 Positively Surprises)
• China holds Central Economic Work Conference in Beijing (December 10-12). (What's China's Plan for 2011-15?)
• India reports industrial production for October. (Can Improving Domestic Demand Curtail India's Industrial Production Slowdown?)
• Mexico reports gross fixed investment for September. (Are Mexico's External Accounts Improving? What About Export Diversification?)
• Venezuela reports November CPI. (What Is the Outlook for Inflation in Venezuela?)

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RGE Upcoming Client Events:        

• December 14: RGE 2011 Outlook Call with Nouriel Roubini and RGE Team
• December 16: Asset Allocation in 2011 for Pensions and Family Offices Event at RGE's NY Office with Nouriel Roubini and Gina Sanchez, Director of Equity and Asset Allocation Strategy, along with three guest panelists specializing in Credit Funds, Equities Funds, and Event Driven Funds – clients only, call your account representative.
• December 17: RGE 2011 Eurozone Outlook Call with RGE Analysts
• January 10: RGE 2011 Latin America Outlook Call with RGE Analysts
• January 11: RGE 2011 Asia Outlook Call with RGE Analysts
• January 12: RGE 2011 Middle East and Africa Call with RGE Analysts

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WELCOME TO ROUBINI MOBILE: Now research on roubini.com is automatically customized for your mobile device. All RGE content - Critical Issues, Economic Research and Market Strategy - as well as email newsletters such as our Daily Top 5, Focus Reports and the RGE 360 are now optimized for your smart phone.   

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RGE Economic Research:

• Front-Loaded Stimulus, Back-Loaded Austerity: The Optimal Fiscal Austerity Path and the Risks of Other Routes by Nouriel Roubini
• The Zone of Austerity: Political Risk Stalking the Eurozone by Michael Moran
• Nordic Unemployment: Explaining the Divergent Trends During the Crisis by Mikko Forss
• The 'Lame Duck' Session: Lots of Quacking, But Can It Pass Legislation? by Michael Moran and Prajakta Bhide
• North America Focus Which Cat Among the Pigeons? by Arun Motianey
• Europe Focus Ireland's Political Game; Germany's Economic Slowdown; UK's Banking Vulnerabilities by RGE's Europe Analyst Team
• Asia Focus Asia/Pacific Central Banks Chart the 2011 Course by Mikka Pineda, Adam Wolfe, Arpitha Bykere, and Michael Manetta
• Comparing Spain With Ireland and Other PIIGS: Better in Some Ways, More at Risk in Others by Elisa Parisi-Capone, Christian Menegatti, and Nouriel Roubini

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Nouriel Roubini's Global EconoMonitor

• Front-Loaded Austerity in the UK by Nouriel Roubini
• Comparing Spain With Ireland and Other PIIGS: Better in Some Ways, More at Risk in Others by Elisa Parisi-Capone, Christian Menegatti, and Nouriel Roubini
• An Orderly Market-Based Approach to the Restructuring of Eurozone Sovereign Debts Obviates the Need for Statutory Approaches by Nouriel Roubini
• Roubini's 'Crisis Economics' – NYT Top 10 Books of 2010
• Nouriel Roubini #12 on Foreign Policy's Top 100 Global Thinkers

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RGE Analyst's EconoMonitor

• Can World Cup Frenzy Keep Qatar Growing After Gas Momentum Fades? by Rachel Ziemba
• Germany: Largesse Oblige? by Michael Moran
• Nature of the Nordic Recessions by Mikko Forss
• RGE's Wednesday Note – A Spanish Inquisition by Elisa Parisi-Capone, Christian Menegatti and Nouriel Roubini
• Will the 'Lame Duck' Lay an Egg? by Michael Moran and Prajakta Bhide
• Good Reads, November 29 by Michael Moran

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U.S. EconoMonitor

• Bailout Recipients by Barry Ritholtz
• Virtuous Cycle: Will NFP Lead to More Capex, Hiring? by Barry Ritholtz
• Jobless Claims Rise, But the Trend Still Looks Encouraging by James Picerno
• The Big Economic Story, and Why Obama Isn't Telling It by Robert Reich
• Will the 'Lame Duck' Lay an Egg? by Michael Moran and Prajakta Bhide
• And this Is Going to Lead to High Inflation? by Menzie Chinn
• The Administration's 'Communication Problem' by Mark Thoma
• Improving Holiday Sales Reflect Economic Recovery by Barry Ritholtz
• Tax Hikes, Status Competitiveness, and Social Stratification by Yves Smith
• National Fiscal Hypocrisy Week by Robert Reich
• Arithmetic of Decline: America's Lost Decade for Jobs by Fabius Maximus

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Europe EconoMonitor

• Pettis on Eurozone Pathways and Endgames by Yves Smith
• The Rough Politics of European Adjustment by Michael Pettis
• Germany Is Old Too by Claus Vistesen
• Another Lesson in How Not to Go About Things from the EU Commission by Edward Hugh
• Will the Irish Crisis Spread to Italy? Paolo Manasse and Giulio Trigilia
• The Eurozone Endgame: Four Scenarios by Peter Boone and Simon Johnson
• Cross-Border Deleveraging and the Shifts in Europe's Bargaining Game by Models & Agents
• Turkmenistan Signals Readiness for Nabucco by Robert M. Cutler
• Numbers by Marcus Svedberg

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Emerging Markets Monitor

• Turkey: The Desperate House-Economist by Emre Deliveli
• Chinese Inflation and European Defaults by Michael Pettis
• How China's Inflation Policy Will Shape the Yuan-Dollar Exchange Rate by Edwin G. Dolan
• Brazil: The Challenges Facing the New Minister by Marcio Garcia

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Finance & Markets Monitor

• Servicer-Driven Foreclosures: The Perfect Crime? by Yves Smith
• Resilient Markets by Barry Ritholtz
• Pricing Corporate Governance by Lucian Bebchuk
• Weighing the Week Ahead: Fundamentals Versus Fear by Jeffrey Miller
• Pondering the Next Phase of the Debt Crisis by James Picerno

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Global Macro EconoMonitor

• Europe and China: Is This Déjà vu All Over Again? by James Hamilton
• Listening to Voices: The IMF's Dialogue with Civil Society by Caroline Atkinson

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A successful marcus evans annual Alternative Investments Summit 2010 (www.alternativeinvestmentssummit.com) ended this week; held at the Red Rock Casino Resort & Spa in Las Vegas, NV.

 

NYU's Nouriel 'Dr. Doom' Roubini: `Karl Marx Was Right'

By Joseph Lazzaro, U.S. Editor | August 13, 2011 10:05 PM EDT

There's an old axiom that goes "wise is the person who appreciates candor almost as much as good news" and with that as a guide, place the forthcoming decidedly in the category of candor.
Economist Nouriel "Dr. Doom" Roubini, the New York University professor who four years ago accurately predicted the global financial crisis, said one of economist Karl Marx's critiques of capitalism is playing itself out in the current global financial crisis.

Sees Marx's Critique Playing Itself Out Now
Marx, among other theories, argued that capitalism had an internal contradiction that would cyclically lead to crises, and that, at minimum, would place pressure on the economic system.
Companies, Roubini said, are motivated to minimize costs, to save and stockpile cash, but this leads to less money in the hands of employees, which means they have less money to spend and flow back to companies.
Now, in current financial crisis, consumers, in addition to having less money to spend due to the above, are also motivated to minimize costs, to save and stockpile cash, magnifying the effect of less money flowing back to companies.

"Karl Marx had it right," Roubini said in an interview with wsj.com. "At some point capitalism can self-destroy itself. That's because you can not keep on shifting income from labor to capital without not having an excess capacity and a lack of aggregate demand. We thought that markets work. They are not working. What's individually rational...is a self-destructive process."
Roubini added absent organic, strong GDP growth -- which can increase wages and consumer spending -- what's needed is large fiscal stimulus, agreeing with another high-profile economist, Nobel Prize-winner Paul Krugman, that, in the case of the United States, the $786 billion fiscal stimulus approved by Congress in 2009 was too small to create the aggregate demand necessary to advance the U.S. economic recovery to a self-sustaining expansion.
Absent additional fiscal stimulus, or unexpected strong GDP growth, the only solution is a universal debt restructuring for banks, homes (essentially households/families), and governments, Roubini said. However, no such universal restructuring has occurred, Roubini said.
Without that additional fiscal stimulus, that lack of restructuring has led to "zombie houses, zombie banks, and zombie governments," he said.
No Good Choices Outside of Fiscal Stimulus or Debt Restructuring
The United States, Roubini said, can in theory: a) grow itself out of the current problem (but the economy is currently growing too slowly, hence the need for more fiscal stimulus); or b) save itself out of the problem (but if too many companies and citizens save, the flaw Marx identified is magnified); or c) inflate itself out of the problem (but that has extensive collateral damage, he said).
However, Roubini said he did not think the U.S. or the world are now at the point where capitalism in self destructing.
"We're not there yet," Roubini said, but he did add that the current trend, if it continues, "runs the risk of repeating the second leg of the Great Depression" -- the 'mistake of 1937.'
In 1937, President Franklin D. Roosevelt, despite the fact that the first four years of massive New Deal fiscal stimulus had lowered U.S. unemployment from a staggering 20.6 percent during the Hoover Administration at the start ff the Great Depression, to 9.1 percent, felt pressure from Congressional Republicans, and he -- as current President Barack Obama did with the Tea Party-led House GOP in 2011 -- gave-in to conservatives and cut government spending in 1937. The result? U.S. unemployment started rising again, and hit 12.5% in 1938.
Cutting government spending prematurely hurt the U.S. economy in 1937 by reducing demand, and Roubini sees the same pattern playing out today, following austerity measures implemented by the U.S. debt deal act.
Economic Analysis: Roubini identifies the core problem of the current U.S. economy in laser-like fashion. It's a riveting interview that one can watch in full by clicking here.
Roubini also argues that the social uprisings in Egypt and in other Arab world countries, in Greece, and now in the United Kingdom, are economic in origin (primarily unemployment, but also, in the case of Egypt, due to the rising cost of living).
Further, the view from here argues that while no one should expect an 'imminent collapse' of capitalism, or even a collapse of the American version, corporate capitalism -- capitalism and free markets are much too nimble and capable of adapting for that -- to say that the current economic order is not experiencing a crisis would not be accurate.

RGO:ROUBINI, apercu sur la crise

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Macroperu El Paraíso Perdido: ¿Qué Viene después del Neoliberalismo?

Paradise Lost: Why Fallen Markets Will Never Be the Same

02 Sep 2010

Ian Bremmer & Nouriel Roubini

Noted political and economic scientists Ian Bremmer and Nouriel Roubini assert that the financial crisis has discredited free-market capitalism and given its state-driven counterpart a boost.

Crises breed denial. Whether a crisis concerns an individual's health, career or marriage, a company's reputation or market share, or a nation's place in the global pecking order, powerful incentives exist within the stricken entity to aspire to a return to normalcy — and to proceed as if that result represents the only option. However, as we all know from human experience, some setbacks are irreversible. We believe the recent meltdown suffered by the U.S. and its partners on the liberal side of the global economy is one of them.

Still, many policymakers and economic thinkers in the U.S., Europe and Japan remain shrouded in denial. They assume that after a period of healing, high growth will return and the rules of global capitalism will restore the preeminence of the U.S. economy and the appeal of a chastened (yet only slightly less freewheeling) laissez-faire Anglo-Saxon model.

Such thinking is either dangerously naive or the result of epistemological blindness. A scenario can be charted in which the U.S. and its liberal market adherents not only return to precrisis "potential growth" but even exceed it. But the political, economic, financial and psychological hurdles standing in the way of this scenario suggest it would require divine intervention to make it so. An extended period of anemic, subpar growth is the much more likely scenario as there is a painful deleveraging by households, financial sectors and governments. One cannot even rule out the risk of a double-dip recession in the U.S. and other advanced economies.

Clearer-minded souls understand that the world of the bubbles is gone and that hard work looms ahead if the advanced economies are to emerge from this period with any hope of keeping pace with the developing world. The policymakers of the market liberal bloc — and yes, in this grave new world, that's how we should think of the old Group of Seven — would need to be willing to take bold action (see "Seven Ways to Save the World").

Even if there is growth after the current anemic period, the ancien régime (that is, the G-7) is on a trajectory to be overtaken by the rising powers of the emerging world as the century unfolds. Because of this, the U.S. and the rest of the free-market economies must use the political leverage they have today to lock in rational safeguards and agreements that will govern the global economy of tomorrow.

After a few more years of lackluster growth — unavoidable due to the deleveraging needs of households and the business sector — financial institutions and governments will seek a return to growth and even demand that national governments move, or move out of the way, to increase it. This will be a dangerous moment — one that war correspondents refer to as "survivor's euphoria." The illusion, of course, is of invulnerability, and too often lessons learned in previous brushes with mortality are cast aside.

One thing the U.S. could do for itself, and for the world, is forgo the seemingly inevitable hand-wringing and political posturing that are already ramping up over the question of the country's declining influence. It has become increasingly clear to all but the most ideological of analysts over the past several years that U.S. strength is on the wane. Conventional wisdom has it that a U.S.-dominated unipolar global system is giving way to a multipolar order, one in which various emerging powers advance competing ideas for how the world should be run and act to further their agendas. Conventional wisdom has it wrong. The financial crisis and global market meltdown have created conditions for a "nonpolar" order — one in which America's chief competitors remain much too busy with problems at home and along their borders to bear heavy international burdens.

This trend is most clearly visible in the transition of the past two years, hastened by political and economic upheaval, from a G-7 to a Group of 20 model of international decision making that provides the governments of increasingly influential and deep-pocketed developing countries like Brazil, China, India, Saudi Arabia and the United Arab Emirates with seats at today's most important international bargaining table. Without these countries, multilateral efforts to solve pressing transnational problems wouldn't have much credibility. But getting this varied group to agree on anything beyond declarations of vaguely worded principle will be profoundly difficult. And countries like China continue to seek a free ride, not realizing that sitting at the table of global economic and financial governance implies both rights and duties. As the artificial unity imposed in 2008–'09 by a shared sense of crisis continues to erode, this problem will grow.

How could it be otherwise? When the number of negotiators in the room expands from seven to 20, it's much harder to reach consensus on much of anything. More worrisome still, the G-20 includes countries with sharply diverging views on democracy, the proper role of government in an economy, investment rules, the importance (and meaning) of transparency, and the best way to ensure that institutions like the United Nations, the International Monetary Fund and the World Bank reflect today's true balance of power. The G-20 could never have forged a "Bretton Woods II," an absurdly ambitious 21st-century attempt to update the multilateral agreements of 1944 that established the rules and institutions that have governed the international monetary system ever since. In fact, the G-20 will become not so much a second Bretton Woods as a supersized U.N. Security Council: a dysfunctional institution often undermined by irreconcilable differences among veto-wielding members. The recent Toronto G-20 communiqué — which is several times longer than any G-7 declaration and fudges the disagreements over growth and austerity now — is an example of this kind of impasse.

An organization that includes members with such fundamental philosophical differences can produce results only when everyone is afraid of the same thing at the same time, such as during the global economic and financial meltdown of 2008–'09. Given the obvious differences in the ways that American, Brazilian, Chinese, German, Indian, Japanese, Russian and South African officials calculate their interests, solutions to pressing transnational problems like global trade imbalances, nuclear nonproliferation and climate change are unlikely to come in coordinated fashion. Policymakers in different countries will try to tackle these problems on their own or will choose to ignore them. This lack of coordination will exacerbate global economic and financial asymmetries. Reducing global current-account imbalances that were one of the causes of the financial crisis requires overspending countries — the U.S. and other Anglo-Saxon nations, as well as the PIIGS (Portugal, Italy, Ireland, Greece and Spain) — to spend less in the private and public sectors, and oversaving countries like China, Germany and Japan to save less, consume more and let their currencies appreciate.

Governments design stimulus plans to satisfy political and economic demands at home, not to revitalize the global economy. In response to the slowdown among China's largest trading partners — the European Union, U.S. and Japan, respectively — Chinese officials implemented a program to boost state spending on roads, bridges, ports and energy infrastructure. The main intent was to create jobs that would keep Chinese workers productive and off the streets, reducing the risk of civil unrest and large-scale domestic challenges to the Communist Party's right to rule. The leaders of developed countries have acted in much the same way. Washington bailed out U.S. automakers to keep thousands of U.S. workers from losing their jobs, and promises made during G-20 meetings to avoid actions that would shield domestic companies from foreign competition weren't going to stop it.

G-20 heads of state will gather in Seoul in November, and there will be plenty more such summits in years to come. Yet policy responses to transnational problems will continue to be improvised and incomplete. U.S. negotiators will resist any institutional framework that allows foreign leaders to impose binding rules on Washington. China will stoke growth to create new jobs, managing development to try to prevent crises that could provoke the kind of social unrest the state can't contain. Russian leaders will continue to try to attract foreign investment while extending state control across strategic sectors of the domestic economy and using the country's energy resources as geopolitical leverage. India will pursue trade liberalization at its own pace. Brazil will try to use its newly discovered offshore oil to enable state-run oil company Petróleo Brasileiro to become an ever-more useful tool of economic policy. Saudi Arabia will use its still-considerable reserves to help manage oil prices and will act as producer and lender of last resort when it finds good value for its money. Efforts to move these governments toward harmonious and effective policy responses to problems that extend beyond the financial crisis — collective security, counterterrorism, climate change and global public health emergencies — will fall short.

Individual governments or coalitions of governments will not have much success in addressing these problems on their own. In the U.S. the Obama administration will have to focus on finding creative ways to spur domestic economic growth and to create jobs in a political environment in which Republicans will demonize continued government spending and resist needed tax increases, with the risk of an eventual fiscal wreck. The U.K. will downsize its foreign policy ambitions as its coalition government works to put the country's fiscal house in order. Fears for the future of the euro zone will dominate discussion in Brussels. Recent legislative elections hint at more upheaval to come in Japan's politics.

Nor is there competition among the world's leading emerging states to fill the vacuum in global leadership. The governments of China, Russia and Saudi Arabia are far too preoccupied with domestic challenges to accept the risks and sacrifices that come with playing a truly major role. Brazil and Turkey have worked to lift their international profiles — by proposing a compromise solution in the fight over Iran's nuclear program, for example — but neither nation has the means to extend its clout much beyond the diplomatic arena.

In other words, at the risk of repeating ourselves, the U.S.-led unipolar order, Western political and economic dominance, and consensus among the world's power players in favor of free-market democracy are all gone. And they're not coming back.


Another major reason that international poli-tics won't return to a pre–financial crisis status quo is the rise of state capitalism. A generation ago, as command economies imploded in Eastern Europe and the Soviet Union, faith that governments could mandate lasting prosperity seemed dead. Western power — fueled by private wealth, private investment and private enterprise — seemed to have established the final victory of liberal free-market economics. Over the past decade, however, public wealth, public investment and public enterprise have made a stunning comeback. An era of state-driven capitalism has dawned, one in which governments inject political calculation into the performance of markets.

Authoritarian governments including China and Russia, not content with simply regulating markets, are moving to dominate them. Political leaders in these countries know that only capitalism can generate the long-term growth that can sustain their political survival, but they want to ensure that the state controls as much as possible of the wealth that markets generate. They need that wealth to spur growth, create jobs and protect banks when times are tough — and to minimize the risk that profits will empower potential rivals for political power.

The rise of state capitalism is most obvious in the energy sector. National oil companies have been with us for decades, but they now control more than 75 percent of the world's crude oil reserves. Beyond petroleum, the Chinese and Russian governments control state-owned enterprises in aviation, defense, mining, power generation, telecommunications and many other sectors, and other governments have begun to follow their lead. These governments also use politically loyal, privately owned "national champions" to advance state interests. And they have created a new class of sovereign wealth funds to maximize the state's return on investment, finance its dominance of domestic economies and extend its geopolitical influence. In a free-market system, markets exist to serve those who participate in them. In a state capitalist system, governments dominate markets to maximize the political power of the state and its leadership's chances of survival.

The growing power of state capitalism will have important implications for the politics of globalization — the processes by which ideas, information, people, money, goods and services cross international borders at unprecedented speed. For years many developing countries have welcomed Western companies and investment, in part to build their domestic economies by exposing local businesses to the advanced technology, managerial expertise and marketing techniques that only foreigners could provide. But as local companies mature, state capitalist governments will begin to more openly promote and protect them at the expense of outsiders. As local businesses begin to compete more effectively, some will begin to see foreign partners as commercial rivals — and will begin to use their growing clout with state and local bureaucracies to rig the game in their favor.

State-owned companies will have even greater advantages. In authoritarian state capitalist countries, laws are written and enforced to help the state maintain order and manage economic development, not to safeguard the rights of individuals and companies. Western companies facing this problem will have little choice but to turn to their governments for help, exacerbating tensions between developed and developing states. Eventually, state capitalism may hamper long-run global economic growth, as businesses trying to maximize political goals cannot be sources of innovation and productivity growth. But though state capitalist companies may thrive in the short run, there is a risk of a race to the bottom, with greater interference in markets even in market capitalist economies.

More broadly, state capitalism will produce a reversal in the trade and capital account liberalization of the past several years as protectionism breeds more protectionism. Authoritarian state capitalists clearly have no monopoly on unfair trade practices, but they have a much easier time imposing them. In Washington trade restrictions are debated in public, interest groups sound off on cable television, proposals under discussion are available to the general public, and individuals and companies can expect a fair hearing in court. State capitalist governments exert enough control over courts, journalists and interest groups to ensure that their plans move forward.

Given the tough economic climate facing U.S., European and Japanese companies and consumers — and the unpopularity of most of their incumbent political leaders — the risk will only increase the likelihood that the developed world will meet financial protectionism with more protectionism. That risk is especially high for the U.S. and China. Friction between the world's largest economy and its fastest-rising competitor will lower the longer-term trajectory of the global economy, creating more uncertainty in international politics.

As many of the world's emerging markets, many of them democracies, look for a safe way forward out of economic crisis into sustainable growth, in whose image will they seek to mold themselves? Will they turn to the champions of free-market capitalism?

In the U.S., President Barack Obama and congressional Democrats are preparing themselves for a likely beating from opposition Republicans in November's midterm elections — not because the GOP is offering bold new ideas, but mainly because the economy and jobs aren't getting better quickly enough. British voters swept the Labour Party from power, but didn't have enough confidence in Conservatives or Liberal Democrats to give either a working majority. French President Nicolas Sarkozy's Union for a Popular Movement and German Chancellor Angela Merkel's Christian Democrats both suffered ringing defeats in recent local elections. The Democratic Party of Japan won a historic election victory in September 2009 and promptly lost its majority in Japan's upper house of Parliament earlier this year. With internal party elections coming in September, the DPJ may soon be looking for its third prime minister in the past year. For leaders of developing states looking for models of political stability, the world's largest free-market democracies have little at the moment to recommend them. Worse, in many of these economies, policymakers, driven by short-term electoral concerns, are kicking the can down the road, postponing necessary fiscal austerity and structural reforms.

Many developing powers will look to China. It's impossible to know how well China's leadership would poll with its people — as if any poll could provide an accurate portrait of public opinion in a country without an organized political opposition or a free press. But it's safe to say that three decades of double-digit growth can buy a government a certain amount of popular goodwill, particularly when that government appears to have emerged first and strongest from the global economic meltdown.

More to the point, China's performance looks appealing to outsiders who are searching for a political and economic system that appears capable of producing both rapid growth and political stability. But past performance is no guarantee of future success, and there are vitally important questions hovering around China and its growth model. Can export-dependent China continue to power the global economy given slow growth among its three largest trading partners? Can it reduce its savings rate and move toward a consumer society fast enough? Is the country's political system flexible enough to adapt successfully to the profound changes China will face over the next generation? Can it create a formal social safety net big enough to accommodate the largest emerging middle class in the history of the planet? Can it maintain public confidence as profound environmental damage takes an ever-increasing toll on the quality of life across the country? As China relies more on technical innovation for future growth and each additional unit of GDP creates fewer jobs, can the Chinese economy continue to provide work for so many people?

There are good reasons to believe that the answers to some of these questions are no. That reality ensures that the global economy is moving into truly unknown territory. And yet that reality may not be enough to discourage many developing economies from adopting increasingly statist economic practices. In that regard, perhaps the most important headway the "Chinese model" has made is in Russia, where a very Eurasian variant of state-controlled capitalism supplanted the liberal market shoots that failed to blossom in the first years of this century. The lessons of Russia's early post-Soviet experiments with market economics, and particularly the default and ruble collapse of 1998 (and the role international "speculators" had in forcing it), severely tainted the euphoric talk of the benefits of shock therapy to formerly closed economies.

Of course, it would be overly simplistic to see the world as moving toward a new bipolar moment, with the U.S. leading a free-market, democratic faction and China a state-dominated, authoritarian camp. Large countries of great significance — Brazil, South Africa and Turkey — appear highly unlikely to forsake the market entirely or to turn back from democracy. India's uniquely bureaucratic system has allowed pockets of market liberalism, and its future course remains uncertain. So too in Indonesia, Mexico and other rising economies.

Again, the emergence, virtually overnight, of the formerly obscure G-20 as the world's preeminent economic policymaking body provides a glimpse into a more chaotic future. It also suggests that the old levers of hegemonic stability and influence exercised so expertly by the British in the first golden age of globalization (roughly 1880 to 1914) and by the U.S. in the second (1989 to 2008) will have far less purchase in the new, postcrisis age. What, after all, has the G-20 accomplished? Since the initial consensus on the need to implement global stimulus reached during the 2008 G-20 summit in Washington, serious policy initiatives have largely failed. Disagreements — over regulatory issues and fiscal policy, for instance — often pit the heirs of post–World War II "Western" order against those now rising to challenge it.
The Toronto G-20 meeting in June featured shadowboxing between the U.S. and China over the undervalued renminbi, as well as more public prodding by the American delegation for China to take steps to lower its savings rate and increase domestic consumption. The inevitable Chinese answer to this lecture from its spendthrift debtor: We will, when you get your fiscal house in order. The inability of either side to make significant moves to address global imbalances does not portend well for future such meetings. A simmering dispute between the U.S. and Europe over stimulus versus austerity has further eroded chances for consensus.

The frictions between advanced and emerging economies have bedeviled other international organizations for some time. Recent flare-ups include the failure of the Copenhagen climate conference last December, complaints from emerging-markets countries over the role of the dollar as the world's primary reserve currency, the still-G-7-heavy makeup of decision-making bodies at the IMF and the World Bank, and the increasing discord over the role or even the legitimacy of Cold War entities like the North Atlantic Treaty Organization and the Organisation for Economic Co-operation and Development. From the viewpoint of many outside the U.S., the resistance of the former hegemon explains this dysfunction. Yet the U.S. and many of its allies counter that even relatively small institutions — the U.N. Security Council, for instance — are paralyzed by rules requiring consensual or even unanimous agreement. Writ large, this fact suggests that the G-20 may already contain the seeds of its own demise, or at least the G-20's neutering as an effective policymaking body.

Indeed, it is harrowing to project the current dysfunction of the G-20 onto some future "expanded and reformed" Security Council, which seems inevitably on course to add as permanent members at some point Brazil, India, Japan and perhaps any mixture of middleweight players (Egypt, Germany, Indonesia, Italy, South Africa). Already-difficult decisions on international security matters like Iran's nuclear program might become hopeless.

In the real world, of course, the weightiest decisions — monetary policy, currency devaluations, war and peace — will still be made at the national level. As the hangover of the financial crisis lingers in the advanced world, the toolbox available to policymakers on both the economic and political sides will get smaller. The Greek crisis and political pressures have taken stimulus off the table in Europe, and the corruption-fueled comeuppance of Japan's new government within a year of taking office has led it to scale back its own spending plans. In the U.S. deficit hawks bearing down on Obama ahead of the midterm elections have done much the same. In all of these places, economic growth will have to find organic fuel, and recent releases from the G-7 suggest that those sages who saw green shoots last spring may actually have been smoking them, as anemic growth is still with us.

Under such conditions, central bankers (at least in the U.S. and Europe) once again represent the last bastion against a double-dip recession. While not our main scenario, the risks of a double dip have been rising for months. The inflation- and deficit-focused European Central Bank may well be dooming the euro zone to a second round of economic decline by maintaining a too-tight monetary policy and backing German calls for fiscal austerity at all costs — again, a political reflex, born of German voters' anger at having to bail out their imprudent Mediterranean cousins. In the U.S. the Federal Reserve Board, having (barely) survived postcrisis efforts to bring monetary policymaking under legislative purview, has started talking again about reentering the market for either mortgage securities or U.S. government bonds. With interest rates near zero, this new round of quantitative easing would signal a desperate moment — a groping of the bottom of the tool kit, with all the peril that public disclosure of such a decision would bring with it.

The reopening of the fire hoses of credit and capital that occurred during the bubble years will happen again and intensify the boom-and-bust cycles. Driven by ever-more- desperate policymakers in the U.S., Europe and Japan, these cycles will both shorten and magnify. Political, policy and regulatory uncertainty will increase, and as a result, financial crises will become more frequent and costly, while risk aversion, volatility and uncertainty will rise. The illusions of the Great Moderation — a phrase coined by Harvard University economist James Stock to describe the two-decade period that started in the late '80s, with its quasireligious embrace of market efficiency and infinite American power — will have created the era of the Great Financial Instability. And nothing could hasten the decline of American influence more than another self-inflicted catastrophe of global market capitalism.

Ian Bremmer is the president of political risk research and consulting firm Eurasia Group and the author of The End of the Free Market: Who Wins the War Between States and Corporations? Nouriel Roubini is a professor of economics at New York University's Leonard N. Stern School of Business, chairman of Roubini Global Economics and co-author of Crisis Economics: A Crash Course in the Future of Finance.

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