WORLD ECONOMICS: Roubini Again Talking Doom...For 2013.

BLOOMBERG/

Nouriel Roubini...aka..."Dr.Doom"...is back predicting a possible new world downturn.

In a Singapore interview, Roubini predicted...a 1 in 3 chance... that a “perfect storm” of  USA fiscal woes, China slowdown, debt restructuring in Europe and continued stagnation in Japan...could converge in 2013.


The NYU professor said “There are already elements of fragility. 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.”

AND: “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.

BRASIL: Roubini Doubts Currency Strengthening Plan.

BLOOMBERG/ Ye Xie and Alexander Ragir /

   Brasil has announced intentions to reduce spending with a “strong fiscal move” to curb demand and cool inflation so that the central bank can lower interest rates.
   Economist Nouriel Roubini believes the effort will backfire,luring more foreign capital as cuts reduce the budget deficit and bolster creditworthiness.
   “I am not convinced by the argument,” Roubini said. “If you are fiscally sound, then you are even more appealing as a country and more money can come.”  The real climbed to a 28-month high of 1.6435 per dollar last week but is now trading at 1.6889.
       Brasil’s inflation-adjusted benchmark rate... 4.8 percent... is the second highest after Croatia.

SPAIN: Prisoner Of the Euro; 4 Endgame Scenarios; Roubini Calls It The "Big Elephant" In The Room.

NYTIMES/ OPINION/ ECONOMIST PAUL KRUGMAN:
    "The best thing about the Irish right now is that there are so few of them. By itself, Ireland can’t do all that much damage to Europe’s prospects. The same can be said of Greece and of Portugal, which is widely regarded as the next potential domino.
    But then there’s Spain. The others are tapas; Spain is the main course."
AND:   "Spain would be better off now if it had never adopted the euro — but trying to leave would create a huge banking crisis, as depositors raced to move their money elsewhere. Unless there’s a catastrophic bank crisis anyway — which seems plausible for Greece and increasingly possible in Ireland, but unlikely though not impossible for Spain — it’s hard to see any Spanish government taking the risk of “de-euroizing.”

ALSO ON TOPIC : Economists Speculate on a Euro endgame; 4 scenarios.
By Peter Boone and Simon Johnson.
 http://baselinescenario.com/2010/11/28/the-eurozone-endgame-four-scenarios/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BaselineScenario+%28The+Baseline+Scenario%29

AND:  Economist Nouriel Roubini is calling Spain the “big elephant” in the debt crisis because there may not be enough money to bail it out. “In Spain, in my view, the eventual fiscal costs of cleaning up the financial system are going to be much larger than have been so far estimated by the government,” Roubini said. “As we saw, the stress tests were not stressful enough, if not a total fudge.”
SEE:  http://www.bloomberg.com/news/2010-11-29/roubini-says-portugal-quite-likely-to-need-funding-update1-.html

ARGENTINA: Kirchner's Death Creates "Great Uncertainty" Claims Economist; Roubini Redux.

BLOOMBERG/    Former World Bank economist Augusto de la Torre (pictured) observes that former President Nestor Kirchner's death creates “great uncertainty” in its economy and he is puzzled by the market's post death rally.
   His observations echo somewhat those of NYU economist Nouriel Roubini, aka "Dr Doom", who even before Kirchner's death, predicted a poor 2011 for the Argentine economy.
 Roubini sees a “cloudy” outlook; that GDP will decline in 2011 as the global slowdown leads to less exports.
 “With a domestic economy that is driven by mostly domestic demand right now, artificially boosted by easy money, easy credit and easy fiscal policy, and an external sector that so far is doing well, but with the fixed exchange rate and high inflation, the real appreciation is going to lead to a significant weakening of that account,” Roubini said.
 FOR DETAILS, SEE: http://www.bloomberg.com/news/2010-10-25/roubini-sees-a-cloudy-outlook-for-argentina-economy-to-decline-in-2011.html

MACROECONOMICS: Roubini Calls U.S. "A Fiscal Drag"; Predicts Emerging Markets To Slow.

BLOOMBERG/ By Daryna Krasnolutska and Kateryna Choursina /
     At a conference in Kiev, NYU economist Nouriel Roubini, aka "Dr. Doom," predicted that the sluggish recovery in the U.S., western Europe and Japan will slow growth in emerging markets.
    He said the U.S. is a fiscal drag for the entire world.
     “My base scenario is that we will have a slow, U-shaped recovery in the advanced economies, but still there is a probability of a double-dip recession, or near depression, as in Japan in the 1990s,” Roubini said. “The recovery in advanced economies is still very tentative.”
      He also warned that the “fundamental problems” of Greece, Ireland, Italy, Portugal and Spain haven’t been resolved after Europe’s sovereign debt crisis.

EUROZONE: Euro Prophet Of Doom Gains Credibility And A New Following.

NYTIMES/ By LANDON THOMAS JR./
Edward Hugh Profile/
"For years, almost nobody paid attention to the sky-is-falling alarms of Edward Hugh,(61) a gregarious British blogger and self-taught economist who repeatedly predicted that the euro zone could not survive."
AND..."But now that the European sovereign debt crisis is rattling world markets, driving the euro lower almost every day and raising doubts about the future of the monetary union, his voluminous musings have become a must-read for an influential and growing global audience, including policy makers in the White House."

BRASIL: "Doctor Doom" Warns Bubble Trouble Ahead.

MERCO PRESS/ Economist and professor Nouriel Roubini, aka "Doctor Doom," who predicted the global financial crisis believes Brasil's, China's and India's economies may be overheating and developing asset bubbles. “In Brazil, like in many other emerging market economies, there is now evidence of overheating of the economy,” he said. “Expected and actual inflation is starting to rise, and that implies that over the next few quarters there has to be a tightening of monetary policy, gradually but progressively, in order to make sure that inflation expectations remain anchored.” Roubini wants Brasil to limit the appreciation of the Real, including the “judicious” use of capital controls. The currency has gained 8.2% against the dollar over the past 12 months.

EUROZONE: Economist Nouriel Roubini Talks With Charlie Rose.

CHARLIE ROSE/ PBS-TV/ 23 minutes/    A warm welcome to the mini-surge in visitors interested in the euro's future and especially in the thoughts of the notorious so-called "Dr. Doom," economist and NYU professor Nouriel Roubini. Here is a recent (11 May) direct link...so you can hear Roubini's thoughts on the U.S. and European economies instead of reading them. Roubini is out slogging his latest book, "Crisis Economics."

EUROZONE: Roubini Says Questions Remain About $1 Trillion Package Effectiveness.

BLOOMBERG/ OPINION/        “While money is available now on the table, all this money is conditional on all these countries doing fiscal adjustment and structural reform,” economist Nouriel Roubini told Bloomberg. “Whether they’ll be able to do it fast enough over time is going to be an open question.” And... “In the short term, raising taxes and cutting spending is going to imply further recession and further deflationary pressures in the euro zone,” Roubini said. “For the last few months, the European Union looked behind the curve, they couldn’t get their act together,” he said. “Now that we are on the verge of a precipice, they realized they had to pull resources together, act together, otherwise the risk was the collapse of the euro zone, the collapse of the euro.”

EUROZONE: Is The Euro Entering A Death Spiral?

GUARDIAN.UK/ OPINION/ "... leading economists such as the Nobel prizewinner Joseph Stiglitz and Nouriel Roubini, who accurately predicted the credit crunch, have expressed doubts over the survival of the euro in the light of the ECB's rigid interpretation of its remit to maintain low inflation, regardless of the consequences of low growth and rising unemployment in countries forced to take deep cuts in public spending." And..."Professor David Blanchflower, the former Bank of England monetary policy committee member, said it was "crazy" for highly indebted countries such as Greece, Spain, Portugal and Britain to enter a "death spiral" of spending cuts that would lead to lower growth and more cuts. "All anyone is talking about is austerity, but all you get is more unemployment and low growth. Then you find yourself in a spiral of debt as low growth forces you to cut spending further," he said."

MACROECONOMICS: Roubini Foresees World Stock Rally End With Deflation Upswing.

BLOOMBERG/

The economist known as "Dr. No," Nouriel Roubini, predicts failure to slow asset-price bubbles in emerging markets and loose monetary policies in the U.S. and around the world may cause an “unraveling and a significant correction of asset prices which will be damaging to global and regional economic growth” in the second half of 2010.

BRASIL: Real Overvalued Without Reform Says Roubini.

BLOOMBERG/
NYU professor Nouriel Roubini, AKA "Dr Doom," who predicted the 2006 financial crisis believes Brasil’s real is overvalued unless it makes structural changes to education and infrastructure. “There’s too much euphoria about Brasil,” said Roubini . “There’s probably too much capital inflow to the country. The strengthening of the currency is too strong on the basis of the long-term fundamentals. I’m positive on Brazil, but not as euphoric. If there’s an acceleration in reforms, the future is going to be bright.”

WORLD ECONOMICS: "Dr. Doom" Roubini Sees "The Mother Of All Carry Trade" Bubbles Forming.

BLOOMBERG/
“We have the mother of all carry trades,” says Nouriel Roubini, who predicted the banking crisis that sae more than $1.6 trillion of asset writedowns and credit losses worldwide since 2007. “Everybody’s playing the same game and this game is becoming dangerous.”
Roubini sees a bubble in emerging-market equities and that gains in some developing-nation currencies are becoming “excessive.” The rally in oil “is not justified by the fundamentals,” he said.

Roubini: Worldwide Stocks Have Risen "Too Much, Too Soon, Too Fast."

BLOOMBERG/
"New York University Professor Nouriel Roubini, who accurately predicted the financial crisis, said stock and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors.
“Markets have gone up too much, too soon, too fast,” Roubini said in an interview in Istanbul yesterday. “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U- shaped. That might be in the fourth quarter or the first quarter of next year.”
“In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets,” Roubini said. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability.”