Nouriel Roubini | Sound Money Institute

Roubini: Fed Faces ‘Treacherous’ Path in Exiting its QE

The Federal Reserve has a difficult balancing act to perform in pulling back from its massive easing program, say Nouriel Roubini, a New York University economist, and Ian Bremmer, president of Eurasia Group, a consulting firm.

“The weak real economy and job market, together with high debt ratios, suggest the need to exit monetary stimulus slowly,” the duo writes in Institutional Investor. “But a slow exit risks creating a credit and asset bubble as large as the previous one, if not larger.

“In the previous tightening cycle, which began in 2004, it took the Fed two years to normalize the policy rate,” they note. “This time the unemployment rate and household and government debt are much higher,” the pair adds.

“If financial markets are already frothy, consider how frothy they will be when the Fed starts tightening — and then when the Fed finishes tightening.”

The economy grew 2.4 percent in the first quarter, and unemployment stood at 7.6 percent in May.

Read More at moneynews.com . By Dan Weil.

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Filed Under: News Tagged With: Federal Reserve, Nouriel Roubini

Nouriel Roubini Seriously Misguided on Gold, on Equities, on Economic Growth, on Money

by F. Peter Brown Leave a Comment

I just finished reading Nouriel Roubini’s seven point analysis on the Bursting of the Gold Bubble in which Roubini’s asks and answer the question “Gold skyrocketed to over $1,900 per ounce in the fall of 2011 from $800 in early 2009, but has since collapsed by around 27%. Why?”

I offer a point-by-point rebuttal.

Roubini: First, tail risks are lower. Gold tends to spike when the global economy faces severe economic, financial and geopolitical threats; but, thanks to a variety of policy actions, the tail-risks argument for holding gold is less compelling today than at any time since the start of the financial crisis in 2007.

Mish: Japan is flirting with a Yen crisis thanks to Abenomics. Nothing has been fixed in regards to structural problems in the eurozone. A US recession is at hand. A China slowdown is baked in the cake. Trade wars loom between China and Europe. A full scale housing bust is underway in Australia. The UK threatens to leave the EU. The eurozone is unlikely to survive in its current state. Tail risks are enormous (and growing). I would have thought tail risks were so obvious that any serious economist would notice them. I was mistaken.

Roubini: Second, inflation is low and falling. Gold does best when there is a risk of high inflation, as it is a traditional store of value against inflation. But, despite the very aggressive monetary and quantitative easing from many central banks, global inflation is actually low and still falling as growth in most of the global economy remains below trend.

Read More at globaleconomicanalysis.blogspot.com . By Mike “Mish” Shedlock.

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Filed Under: News Tagged With: Gold, Nouriel Roubini

Roubini: Euro Zone May Collapse Within Days

by F. Peter Brown Leave a Comment

New York University economist Nouriel Roubini says the euro zone’s days may be numbered, and he’s not talking about some day far off in the future.

“In a few days, there might not be a euro zone for us to discuss,” he said at a Los Angeles conference sponsored by the Milken Institute, Reuters reports.

European policy makers may have to fork over 600 billion euros ($794 billion) in aid or buy government bonds to erase the debt crisis, economists tell Bloomberg.

Roubini says Greece can’t come up with the 10 percent spending reduction necessary to prevent its debt from exploding out of control.

And even if it could, its economy would get ruined in the process, he maintains.

Roubini compares Greece to Argentina in 2001, shortly before it defaulted on its debt.

Roubini Economist: We’re Headed For World of Inflation

by F. Peter Brown Leave a Comment

One way or another, RGE Monitor senior analyst Arun Motianey says we’re headed for an inflationary world.

The three most likely investing scenarios now, Motianey says, are inflation without indexation, inflation with indexation and deflation, says Motianey, who recently joined investment guru Nouriel Roubini’s Roubini Global Economics.

“Deflation is a very serious risk [but] inflation is a greater likelihood,”

With debt swamping governments from here to Europe to Japan, Motianey recently told Tech Ticker he thinks the central banks will probably choose to monetize public sector deficits.

“I’m expecting the central banks of the world to see the light,” he says. “This would be a period of voluntary inflation, instead of involuntary inflation” (like the 1970s), he said.

Read More: – By Julie Crawshaw, Moneynews

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Filed Under: News Tagged With: Arun Motianey, Deflation, Indexation, Inflation, Nouriel Roubini, Roubini Global Economics

Roubini: Dollar is Soon Headed Down

by F. Peter Brown Leave a Comment

Despite the dollar’s recent rise to eight-month highs against the euro, it’s headed for a multi-year drop against other currencies, says NYU economist Nouriel Roubini.

The greenback will fall 15 percent to 20 percent against Asian and commodity currencies, such as the Brazilian real, over the next two to three years, the New York University professor said at a recent conference, Bloomberg reports.

“I see anemic recovery of economic growth in the United States, and the United States’ current account deficit is still very large,” he said.

“In the next two or three years, the dollar has to weaken further on a trade-weighted basis.”

Roubini: Asset Bubble Is Beginning Now

by F. Peter Brown Leave a Comment

Withdrawing economic stimuli and tightening monetary policy are very difficult future policy choices, but something has to be done because asset bubbles have started to take shape, Nouriel Roubini, chairman of Roubini Global Economics, told CNBC Wednesday.

“On monetary policy, exiting too soon is going to tip the economies into recession; the trouble is… now there is the beginning of an asset bubble that’s becoming global,” Roubini told “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland.

In Asia and China real estate prices are rising too fast, as do stock prices if you look at the PE ratio, he explained.

His comments echoed earlier warnings by European Central Bank Governing Council member Ewald Nowotny that there is a concrete risk of asset bubbles in emerging markets and in some commodities.

Read More: – By Antonia Oprita, Associate Web Producer, CNBC.com

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Filed Under: News Tagged With: asset bubbles, Nouriel Roubini

Roubini: Sovereign Debt Crisis Will Sweep Globe

by F. Peter Brown Leave a Comment

The weak economic recovery is likely to increase the debt burden of many advanced economies, including the United States, Britain, Japan and several euro zone countries, writes former White House economist Nouriel Roubini.

In his weekly column in Forbes, along with his collaborator, Arpitha Bykere, a research analyst, Roubini, now a professor of economics at New York University, said that the decisions by governments in 2008 and 2009 to do “whatever it takes” to be a backstop their financial systems and keep their economies afloat temporarily eased investor concerns.

“But if countries remain biased toward continuing with loose fiscal and monetary policies to support growth, rather than focusing on fiscal consolidation, investors will become increasingly concerned about fiscal sustainability and gradually move out of debt markets they have long considered safe havens,” writes Roubini.

“Most central banks will withdraw liquidity starting in 2010, but government financing needs will remain high thereafter. Monetization and increased debt issuances by governments in the developed world will raise inflation expectations. These governments will have to offer higher real yields or investors will move to more attractive emerging markets.”

Read More: – By:Gene Koprowski, Moneynews

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Filed Under: News Tagged With: economies, Globe, Nouriel Roubini, Sovereign Debt Crisis

Roubini: Many Jobs Gone Forever

by F. Peter Brown Leave a Comment

Many American investors may think the worst of the economic downturn is over, but they are completely wrong, writes Clinton administration economist and NYU professor Nouriel Roubini.
“Conditions in the U.S. labor markets are awful and worsening,” writes Roubini in The New York Daily News.
“While the official unemployment rate is already 10.2 percent and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5 percent.”

Roubini: Stock Markets Up Too Fast

by F. Peter Brown Leave a Comment

Global stock markets may slip soon, as share prices have “gone up too much, too soon, too fast,” says former White House economist Nouriel Roubini.

In an interview with Bloomberg News, the New York University professor said global equities may suffer a “major decline” after climbing to their highest levels in nearly a year.

Stocks have soared around the world in the past six months as evidence abounds that the economy is emerging from the deep recession.

The Standard & Poor’s 500 Index has climbed 51 percent from a 12-year low in March while Europe’s Dow Jones Stoxx 600 is up an amazing 48 percent. The enthusiasm starkly contrasts with forecasts and fears from policy makers and investors.

Global stock markets may slip soon, as share prices have “gone up too much, too soon, too fast,” says former White House economist Nouriel Roubini.

In an interview with Bloomberg News, the New York University professor said global equities may suffer a “major decline” after climbing to their highest levels in nearly a year.

Stocks have soared around the world in the past six months as evidence abounds that the economy is emerging from the deep recession.

Roubini: No Housing Market Bottom Yet

by F. Peter Brown Leave a Comment

NEW YORK — U.S. housing prices may still fall more than 10 percent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said on Thursday.
Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said massive losses in commercial real estate loans will add to the problem, forcing banks to raise more capital.
“The stress is moving from residential mortgages that are still in deep trouble, to commercial real estate, where they are just starting to recognize that they’re going to have massive, massive losses,” Roubini of RGE Global Monitor told reporters after a presentation for a World Economic Forum report on the global financial system.

Roubini: Fed Faces ‘Treacherous’ Path in Exiting its QE

Nouriel Roubini Seriously Misguided on Gold, on Equities, on Economic Growth, on Money

Roubini: Euro Zone May Collapse Within Days

Roubini Economist: We’re Headed For World of Inflation

Roubini: Dollar is Soon Headed Down

Roubini: Asset Bubble Is Beginning Now

Roubini: Sovereign Debt Crisis Will Sweep Globe

Roubini: Many Jobs Gone Forever

Roubini: Stock Markets Up Too Fast

Roubini: No Housing Market Bottom Yet

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