Roubini: 40 Percent Chance of a Double Dip

Written By Brian Hicks

Posted September 7, 2010

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Here’s the latest take on the world economy from economist Nouriel Roubini.

Needless to say, he’s still bearish….

From CNBC by Patrick Allen entitled: More than 400 US Banks Will Fail: Roubini

Even if the US and European economies manage to avoid a double dip, it will still feel like a recession, while more than half of the 800-plus US banks on the “critical list” are likely to go bust, according to renowned economist Nouriel Roubini of Roubini Global Economics.

The second half of the year will remain weak as tailwinds become headwinds, Roubini told CNBC on the shores of Lake Como, Italy at the Ambrosetti Forum economics conference.

“In the second half, fiscal policy becomes a headwind, no more cash for clunkers,” Roubini said. “The positive scenario is that growth will be below par.”

Roubini recently said the chance of a double-dip recession in the US was now more than 40 percent.

“The big risk is that there will be a downturn in markets that could impact the bond, the equity and the credit markets,” he said.

Job losses have been higher, the US jobs number will show that. There is no private sector jobs growth,” he said. “Consumption is weak, exports are weak and housing is weak.”

“If there is no final sales and no final demand, companies will not invest,” he added.

Roubini said he believes hopes of decoupling will be dashed as the slowdown in the US impacts China, Japan and the euro zone.

“In Europe, Germany is strong but the rest of the continent is pretty dismal,” he said. “The rest of the world cannot cope without the prop of the US consumer. Chinese growth in the second half will be 7 percent.”

Get used to it,” Roubini said. “Deleveraging has to continue as governments and consumers deleverage in the developed world.”

‘We have to expect the new normal,” he added. “We do not need a double dip for it to feel like recession.’”


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