He predicts a global economic and financial crisis, sparked by a debt bubble and accompanied by stagflation.
Nouriel Roubini, chief economist at Atlas Capital, made his name calling the financial crisis of 2007-09, earning the moniker of Dr. Doom.
He finds a lot to be gloomy about now too. He sees a global economic and financial crisis on the horizon, sparked by a debt bubble and accompanied by stagflation.
Here are some of the most colorful quotes from his writings and comments this year.
“Center-right governments have persistently cut taxes without also cutting spending, while center-left governments have spent generously on social programs that aren’t fully funded with sufficient higher taxes.”
“There will be a hard landing – a deep, protracted recession – on top of a severe financial crisis. As asset bubbles burst, debt-servicing ratios spike, and inflation-adjusted incomes fall across households, corporations, and governments, the economic crisis and the financial crash will feed on each other.”
“Once the inflation genie gets out of the bottle – which is what will happen when central banks abandon the fight [i.e. interest-rate increases] in the face of the looming economic and financial crash – nominal and real borrowing costs will surge. The mother of all stagflationary debt crises can be postponed, not avoided.”
Twitter, November 19. https://twitter.com/Nouriel/status/1593841338981974016
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“Central banks are in both a stagflation trap and a debt trap. Amid negative aggregate supply shocks that reduce growth and increase inflation, they are damned if they do and damned if they don’t. If they increase interest rates enough to bring inflation down to 2%, they will cause a severe economic hard landing. And if they don’t – attempting instead to protect growth and jobs – they will be left increasingly far behind the curve, leading to a de-anchoring of inflation expectations and a wage-price spiral.”
“Most forward-looking indicators of economic activity in advanced economies point to a sharp slowdown that will grow even worse with monetary-policy tightening. A hard landing by year’s end should be regarded as the baseline scenario.”
“There are early signs that the Great Moderation has given way to the Great Stagflation, which will be characterized by instability and a confluence of slow-motion negative supply shocks.”
“U.S. and global equities have not yet fully priced in even a mild and short hard landing. Equities will fall by about 30% in a mild recession, and by 40% or more in the severe stagflationary debt crisis that I have predicted for the global economy.… The crisis is here.”
“Today, we face supply shocks in a context of much higher debt levels, implying that we are heading for a combination of 1970s-style stagflation and 2008-style debt crises – that is, a stagflationary debt crisis.”
“Though the current global situation confronts us with many questions, there is no real riddle to solve. Things will get much worse before they get better.”