Better gird and re-girt those loins, people. In an emergingmarkets interview, Nouriel Roubini stated: In my view there is a high likelihood that there is going to be another global financial crisis. My data suggests that most advanced economies are already entering a recession. We’re not any more in an anaemic recovery, we’re not any more at stall speed. We’re at the beginning of a contraction. I think there’s a contraction already in most of the eurozone, there is a contraction in the US, also in the UK. That’s the first point.
The second point is we’re running out of policy bullets – monetary, fiscal – backstopping the financial system.
And third, the eurozone is a source of systemic risk. If there is a disorderly situation in the eurozone it’s going to be worse than Lehman.
At this point it’s not any more Greece or Ireland or Portugal. The contagion has spread to Italy and Spain. In the case of Italy and Spain the critical thing is that even if you believe that Italy and Spain are illiquid but solvent, even adjusting from the reforms, they’ve lost credibility in the markets. It’s going to take them at least a year to regain it.
Therefore you need a lender of last resort to backstop the sovereigns until they regain the credibility to avoid spreads going up and leading to a self-fulfilling run. And there are only a very few options, none of them feasible. One of them is the [eurobonds]. It’s going to take at least two years until they can pass that and it’s going to be approved by a treaty.
The other option is...
Find out the rest at http://www.emergingmarkets.org/Article/2906430/Interview-with-Nouriel-Roubini.html
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