Perennial doomsayer Nouriel Roubini (aka Dr Doom) has
poured cold water on hopes of a faster US recovery, suggesting US growth is
likely to remain, below-trend at best for many years to come.
Former Federal Reserve Chair Paul Volcker has also suggested
that the individual states in the US cannot continue their current spending,
taxation and budget practices, and the US federal government’s attempts to
reduce its deficit could wreak havoc on the individual state budgets.
Getting back to Roubini — in an article published in the
Australian Financial Review, he suggested that the US Federal Reserve will
carry out more quantitative easing this year, but it will have little effect,
as long term official interest rates are already low – lowering them further
will not boost spending.
He also identified that weak demand is having an effect on
US companies already, with lower revenues hurting margins and profitability. “A
significant equity price correction could be the force that in 2013 tips the US
economy into outright contraction”. The consequences of the US going backwards has severe
implications for the rest of the world….
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