Economics: Crisis, Crash or Catastrophe? Nouriel Roubini tells all

So, who is Nouriel Roubini?

Well for one thing, he’s Emeritus Professor of Economics at The Stern School of Business at New York University, so he knows a bit about things. But his real claim to fame is that he was one of the few people to see the crash of 2007 coming beforehand, as t’were.

I see. And should we be getting a little gloomy again?

No! If he’s right, this time we should be absolutely hand-wringing, tie-chewing, nail-biting, eye-rollingly terrified. He sees the current inflation producing the most enormous dinosaur-sized crash since that old asteroid struck back in 65million years BC, as he explains here in the Guardian [1]

I thought all this inflation whatsit was just a blip?

Opinion was divided. But now it’s hardening up to say it’s here to stay, especially due to supply factors like the Ukraine war, Covid recovery, climate change and so on.

But surely the big boys at the top have got it all under control?

Weelllll……..they have been putting up interest rates to cut off the supply of money, But that only leads to a shrinking economy. Already we are seeing bubbles popping just about all over the place, like cryptos and the property market. But if the equity markets crash this time, the Good Professor thinks it could be by 50%, which is kind of like, unprecedented.

Gosh! And what will Central Banks do then?

They will abandon their hawkish stance, loosen interest rates, and produce more inflation, leading in turn to………

Higher interest rates?

Exactly! And so we get utterly stuck in the dreaded cycle of stagflation, with no obvious way out, because the world is much more indebted than it was in the 1970s.

How so?

Ever since Thatcher-Reagan reforms of the 1980s, the world has been awash with cheap credit and borrowing, a problem which only got worse after 2008. Basically, there’s nothing left in the kitty.

So, like the dinosaurs, we’re doomed?

Well, some dinosaurs survived. Smaller ones. Like sparrows and seagulls for example .

So the best thing to do is?

Get ready for a diet of crusts of bread


#economics #nouriel roubini #inflation #interest rates

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