Economist Nouriel Roubini says the risk of a global recession is greater than 50 percent, and he’s putting his money in cash.
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Hi Colin,
I find the above comment from Dr Roubini (global recession) quite interesting yet difficult to agree with, as all recent economic data from US appears to point to albeit slow yet positive growth in the US economy – furthermore the majority of US companies are meeting or exceeding (analyst) earnings estimates and are revising future guidance upwards, with positive business outlook/confidence looking forward. This being the case, sovereign debt issues aside, i cannot understand Roubinis logic underpinning global recession (2 successive quarters of negative growth)…unless i have perhaps missed or misinterpreted something ??
John, I fear that he is right. The divergence between US Savings and Investment threatens a deflationary spiral. I don’t agree with raising tax rates as this would aggravate the problem. Austerity measures will not solve it. The only solution I can see is massive infrastructure spending — but the projects must produce market-related ROI, otherwise the US will end up in the same hole as Japan: massive debt and little to show for it. Regards, Colin
P.S. Many US companies are showing increased earnings but how much of this is from strong growth in their domestic market and how much is from increased offshore earnings as a result of the falling dollar?