Aug. 24 (Bloomberg) -- Nouriel Roubini, the New York University professor who
predicted the financial crisis, said the chance of a double-dip recession is
increasing because of risks related to ending global monetary and fiscal
stimulus.
The global economy will bottom out in the second half of 2009, Roubini wrote
in a Financial Times commentary today. The recession in the U.S., the U.K., and
some European countries will not be “formally over” before the end of the year,
while the recovery has started in nations such as China, France, Germany,
Australia and Japan, he said.
Governments around the world have pledged about $2 trillion in stimulus
measures amid the worst worldwide recession since the Great Depression. Federal
Reserve Chairman Ben S. Bernanke and other global policy makers have cautioned
that the recovery is likely to be muted, indicating they would not soon remove
all the stimulus injected into the financial system.
“There are risks associated with exit strategies from the massive monetary and
fiscal easing,” Roubini wrote. “Policy makers are damned if they do and damned
if they don’t.”
Government and central bank officials may undermine the recovery and tip their
economies back into “stagdeflation” if they raise taxes, cut spending and mop
up excess liquidity in their systems to reduce fiscal deficits, Roubini says.
He defines “stagdeflation” as recession and deflation.
Market Vigilantes
Those who maintain large budget deficits will be punished by bond market
vigilantes, as inflationary expectations and yields on long-term government
bonds rise and borrowing costs climb sharply, he wrote. That will in turn lead
to stagflation, Roubini said.
European Central Bank officials led by President Jean- Claude Trichet are
suggesting they won’t rush to reverse their emergency stimulus amid mounting
evidence of an economic recovery. The ECB has cut its benchmark interest rate
to a record 1 percent and is buying covered bonds and flooding banks with
money.
“We see some signs confirming that the real economy is starting to get out of
the period of freefall,” Trichet said at the Fed’s annual symposium in Jackson
Hole, Wyoming, on Aug. 22. This “does not mean at all that we do not have a
very bumpy road ahead of us.”
When needed, the ECB will implement a “credible exit strategy” from its crisis
policies, Trichet said.
‘Monetary Medicine’
The U.S. must address the massive amounts of “monetary medicine” that have
been pumped into the financial system and now pose threats to the economy and
the dollar, billionaire Warren Buffett said last week.
Roubini currently expects a U-shaped recovery, where growth will be “anemic
and below trend for at least a couple of years,” he said. A full global
recovery from the current recession may take two years or more, Nobel laureate
Paul Krugman said earlier this month.
Rising unemployment, a global financial system that is still “severely
damaged” and weak corporate profitability are among reasons why any recovery
won’t be V-shaped, Roubini said.
“Strains persist in many financial markets across the globe,” Bernanke said in
an Aug. 21 speech in Jackson Hole. “The economic recovery is likely to be
relatively slow at first, with unemployment declining only gradually from high
levels.”
Energy and food prices are also rising faster than warranted by economic
fundamentals, which may also increase the risk of a double-dip recession,
Roubini wrote, adding that they could be driven by speculative trades.
“Last year, oil at $145 a barrel was a tipping point for the global economy as
it created negative terms of trade and a disposable income shock for
oil-importing economies,” he said. “The global economy could not withstand
another contractionary shock if similar speculation drives oil rapidly toward
$100 a barrel.”
To contact the reporter on this story: Shamim Adam in Singapore at
sad...@bloomberg.net
===
Sent from Bloomberg for Blackberry. Download it from the Blackberry App World!
Powered by Telkomsel BlackBerry®
------------------------------------
+ +
+ + + + +
Mohon saat meREPLY posting, text dari posting lama dihapus
kecuali diperlukan agar CONTEXTnya jelas.
+ + + + +
+ +Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/obrolan-bandar/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/obrolan-bandar/join
(Yahoo! ID required)
<*> To change settings via email:
mailto:obrolan-bandar-dig...@yahoogroups.com
mailto:obrolan-bandar-fullfeatu...@yahoogroups.com
<*> To unsubscribe from this group, send an email to:
obrolan-bandar-unsubscr...@yahoogroups.com
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
