subject: Professor Roubini Speaks Out The Harsh Truth [print this page] Economics professor Nouriel Roubini of New York University has always been known for speaking out the truth. When he recently said that the economic situation had improved and anticipated the recession to down shutters by the end of 2009, the stock markets had rallied. It seems in these days of gloom the bear market operators do not require much to break into giggles even flippant rumour.
However Roubini cleared the clouds by making a statement on the Internet in his blog. He wrote, It has been widely reported today that I have stated that the recession will be over 'this year' and that I have 'improved' my economic outlook. Despite those reports - however - my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.
Professor Roubini had always stated that he had expected this recession to close by the end of 2009. He had been forecasting this for a long time. Thus when he again stated the same the media started a song and dance about it disregarding the fact that this was not a new statement. But the media took this as an opportunity to highlight the same for good business reasons. Dow Jones likewise responded although employment numbers continued to be an alarming source of worry.
What need to be noted in the recent statements of Roubini on the economy are his increasing gloomy predictions about the mid-term and short-term prospects of the economy. It is based on the increasing fiscal imbalances caused by the public indebtedness. Roubini has been a supporter of the huge stimulus programmes although these led to massive deficits. He agreed that if these steps were not taken then the global financial system would have collapsed and there would have been a contraction and free fall of the economy of USA. But unlike Paul Krugman he lays great stress on the dangers of this massive expanding liability of the federal government.
Apart from focusing on the never before experienced levels of deficit, Roubini is also concerned that ending of the recession, that he had long been forecasting to be only for a short time. He predicted that it would be followed by a double-dip recession during the second half of 2010. In between there would be a stage of anemic growth of something lower than 1%.
