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Inflation and recession
will be the constant companions
for years to come,
according to Nouriel Roubini
The period of relative calm in the global economy has ended and what
lies ahead is an era of stagflation, meaning a time of slow growth
coinciding with higher unemployment and rising inflation, renowned
economist and New York University professor Nouriel Roubini said on
According to Roubini, who was among the first to predict
financial crisis, today's situation may be even worse given the host
of risks and "mega-threats" the world is facing.
"In the short term, there are [risks] related to the war in Ukraine,
of course, to inflation and to the specter of a financial crisis
which could arise in the next few months or in the next two or three
Added to this are mega-threats likely to materialize more or
less severely in the long term... starting with climate change...
geopolitical tensions which could degenerate into nuclear war
between great powers, and socio-political instability," he said in
an interview with the French news outlet Le
Roubini, dubbed 'Doctor Doom' by Wall Street, argued that the
general consensus that inflationary pressures are temporary and that
raising rates will temper soaring prices and provide for a "soft
landing" of the economy is wrong.
"I think the landing will not be soft but harsh, and associated with
Raising interest rates while the economy is losing
momentum, with an overall level of debt much higher than in the
1970s, could cause a collapse in stock and bond markets, which could
deepen the recession," he stated.
According to the economist,
"part of the solution will necessarily
involve inflation, which reduces the debt burden."
"I'm not saying inflation is desirable, but I don't see how to avoid
it. The era of the great moderation is over, we are entering the
Roubini also warned of a potential trade war between the West,
group of revisionist powers," namely Russia, China, Iran and North
Korea, "which could lead to a fragmentation of globalization and a
re-localization of production chains, increasing global insecurity."
The economist urged the global community to learn from history and
mobilize forces to prevent a further worsening of the crisis.
"We lived like zombies who go back to sleep despite the alarm
ringing, and who have forgotten that history is not linear...
creation of major international institutions enabled us to reconnect
with a period of relative peace and prosperity. But believing that
such an era can last is a mistake...
The main stages of grief are
denial, anger, depression and acceptance.
If we look our problems
squarely in the face, we can wake up and start mobilizing, but we're
still stuck somewhere between denial and anger."
'We are Entering the Great Stagflation'
by Marie Charrel
January 13, 2023
American economist Nouriel Roubini,
October 26, 2022, in New York.
EMMY PARK/MEGA/KCS PRESSE
trade war, global
The American economist,
known for his pessimism,
lists in his latest book
the major threats
in the coming years.
He is one of the few who saw the 2008 crisis coming.
called "Doctor Doom" because of his gloomy forecasts,
Roubini, professor of economics at New York University Stern School
of Business, has published a new book, Megathreats.
It lists the
risks facing economies in 2023 and beyond. The first could be a
You are among the few who saw the 2008 crisis coming
- Is today's
It is difficult to say because we are facing a series of risks with
different time horizons.
In the short term, there are of course
those linked to the war in Ukraine, to inflation as well the
prospect of a financial crisis that could materialize over the next
two or three years.
In addition, there are "megathreats" that could
materialize more or less severely in the longer term, and which do
not only relate to the economy.
Climate change, eventually, if it's not controlled, of course, can
destroy our planet. Geopolitical tensions could degenerate and lead
to nuclear war. Not to mention socio-political instability.
Everywhere, we are seeing a backlash against liberal democracies.
How far could the recession caused by the energy crisis go?
The general consensus on the subject - that of policymakers, Wall
Street and central banks - got it wrong for the last year and a
Central banks have long claimed that the inflationary
pressures we are seeing are temporary. But they are not.
we will raise policy rates and calm inflation, with a soft
landing of the economy.
This was also incorrect, as the UK
demonstrates, with the country on the verge of stagflation resulting
from very high inflation.
I don't think the landing will be soft. It's going to be severe and
associated with financial stress.
Raising interest rates while the
economy is losing momentum - with overall debt levels well above
those of the 1970s - could cause a collapse of stock and bond
markets, potentially deepening the recession.
Following the adoption of the
Inflation Reduction Act (IRA) in the
United States - something seen as detrimental to European industry -
are you afraid of a trade war between the US and Europe?