Nouriel Roubini at the World Economic Forum 2010

27 Jan 2010 Reuters
[Please note -- the file was too big for me to download so I could not split it into the relevant sections. I suggest those of you who are interested to please go through the full version which is here http://www.youtube.com/watch?v=VLV2Oh02fL0&feature=related
If somebody could kindly upload the file into smaller pieces it would be very helpful!]


[On what has happened and how the global economy is going to look in the next year]
"The policy actions by authorities around the world have led to the beginning of an economic recovery. Those who are more optimistic believe we are going to go back to potential growth very rapidly, a v-shaped recovery. I'm more in the camp of those who believe there is going to be a u-shaped recovery and growth that is far below trend...what the folks at PIMCO call the 'new normal'. There is even a risk of a double-dip recession.
Emerging market economies are going to do better than advanced economies of the US, Europe and Japan.

[On advanced economies]
"There are the effects of monetary and fiscal stimulus, restocking of investories, and other temporary effects. There will be a faltering of growth in the second half.
Why? Unemployment rate is 10%, job growth is less.
This was a balance sheet recession due to excessive leverage and debt.
There is massive public debt and private sector debt is stabilizing at a high level.
This massive re-leveraging of the public sector is a way of socializing private losses. This will increase the public debt and deficit."

[More drags on growth that will cause growth to slow]
"Consumption in the west has to grow less than GDP in order to increase savings and deleveraging.
The corporate sector is going to be anaemic. Residential investment, construction and capital expenditure is going to be more constrained.
Fiscal stimulus in the second half will be a drag on growth. And therefore unless there is a recovery of private demand the recovery is going to be slow.
At some point markets are going to worry about increased spending and reduced taxes. There is a risk of runaway fiscal deficits and monetization. Yields will go up and will crowd out the recovery."

[On Global imbalances]
"The overspending countries that were running current account deficits are now retrenching like the US while the over-saving countries like China, Germany, Japan and the emerging markets are not compensating for the fall in demand by the overspending by reducing their saving rate and increasing their own spending. So globally when there is a glut of capacity there is going to be a weaker recovery of aggregate demand."

[Bearish on the Eurozone]
"In the periphery (Greece, Italy, Spain, Portugal), there is not just a public debt sector sustainability problem. There is also a competitiveness problem. They are losing market shares to China and Asia, wages grow more than productivity, unit labour costs were rising, real appreciation and current account deficits. So even if you solve the debt and fiscal problem you still have a competitiveness problem. This is the first real test of the monetary union in the Eurozone. I am quite bearish about that."

[On Japan]
"Unless there is an acceleration of structural reform, the demographics are against you. There is a very large stock of public debt. There is acceleration of deflation."

[On emerging markets]
"You can be more bullish on emerging markets. Potential growth of 5 to 7 per cent is greater than in the west which is 2 to 3 per cent. They did not have leverage of the household sector and the financial sector. They have been able to do counter-cyclical monetary and fiscal policies."

[On China not being able to rescue us]
"However a few caveats. China alone cannot be the only engine of global growth. After all Chinese GDP is only $4 trillion; the US, European and Japanese GDP is $4 trillion. Then the model of export-led growth is challenged because the US is spending less, consuming less and importing less. China is stimulating public demand, but eventually demand has to shift from net export-led demand to private consumption-led demand. Unfortunately there are structural reasons why savings rates are high and consumption rates are low in China. The response by the Chinese authorities has been to do even more fixed investment, increasing the glut of capacity as it exists in China. So while on the one side China is over-heating in the short-run they will find themselves with deflationary pressures."

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[stealthblack6]

Revelation 18 foretells of a one world economic structure that will be in place in the last half of the seven year Tribulation period and it will be headquartered in Babylon located in modern-day Iraq. The world leader - the Antichrist - will require all who want to buy or sell, in other words, to sustain life, they will be required to have an identification mark on their forehead or the back of their hand (Revelation 13:16-17).