From Der Spiegel, June 12:
Interview with Economist Nouriel Roubini
DER SPIEGEL: Mr. Roubini, the pandemic has brought
the global economy to its knees, and millions of people have lost their
jobs. Is the crisis as severe as the Great Depression of the 1930s?
Roubini:
The crash is even greater than it was then. It took years from 1929
until the full extent of the crisis became visible. Compared to today,
it was like a slow-motion train wreck. Now the world economy has
collapsed within weeks, and in the U.S. alone, more than 40 million
people are unemployed. Many believe that the economy will pick up again
just as quickly, but that is a fallacy.
DER SPIEGEL: You don't believe in a V-shaped
recovery despite the huge economic stimulus packages? After all, 2.5
million new jobs were created again in the U.S. in May.
Roubini:
Of course, we will see an upswing in the second half of the year. But
it will not be a real one, but a delusion. The economy has fallen so
steeply that it is practically inevitable that it will pick up again at
some point. But that won't compensate for the crash in any way. Even at
the end of 2021, the U.S. economy will still be below the level of early
2020; too much has broken down. And the unemployment rate will level
off at 16 or 17 percent - during the financial crisis it was only 10
percent. The job creation in May was only 2.4 million
after 42 million lost their jobs in the last few months. And the actual
unemployment rate is much higher than officially measured.
DER SPIEGEL: The stock market obviously sees things
differently, with shares already trading at the same level as at the
beginning of the year.
Roubini: The stock market
is deluding itself. Investors are betting that there will be further
economic stimulus packages and a V-shaped recovery of profits. But for
the people here in the U.S., that means nothing.
DER SPIEGEL: Since when have Americans not cared about the stock market?
Roubini:
On Wall Street, big corporations set the tone, banks and technology
companies in particular. They will survive the crisis because the state
will never let them go under. They will kick people out, cut costs and
in the end, they will have even more market power than before. But what
we here call Main Street, small- and medium-sized companies, can't do
that. They just go bankrupt. I estimate that every second restaurant in
New York City will have to close, but McDonald's will survive. But
that's not all....
....
MUCH MORE
See also our unposted:
So, How Good Was Nouriel Roubini's Call On The Econ. Effects of the Response to Covid-19?
From Der Spiegel,
February 27, 2020:
Economist Nouriel Roubini correctly predicted the 2008 financial crisis.
Now, he believes that stock markets will plunge by 30 to 40 percent
because of the coronavirus. And that Trump will lose his re-election
bid.
Nouriel Roubini is one of the most prominent and enigmatic
economists in the world. He correctly predicted the bursting of the U.S.
housing bubble in addition to the 2008 financial crisis along with the
ramifications of austerity measures for debt-laden Greece. Roubini is
famous for his daring prognostications and now, he has another one: He
believes that coronavirus will lead to a global economic disaster and
that U.S. President Donald Trump will not be re-elected as a result.
DER SPIEGEL: How severe is the coronavirus outbreak for China and for the global economy?
Roubini:
This crisis is much more severe for China and the rest of the world
than investors have expected for four reasons: First, it is not an
epidemic limited to China, but a global pandemic. Second, it is far from
being over. This has massive consequences, but politicians don’t
realize it.
DER SPIEGEL: What do you mean?
Roubini:
Just look at your continent. Europe is afraid of closing its borders,
which is a huge mistake. In 2016, in response to the refugee crisis,
Schengen was effectively suspended, but this is even worse. The Italian
borders should be closed as soon as possible. The situation is much
worse than 1 million refugees coming to Europe.
DER SPIEGEL: What are your other two reasons?
Roubini:
Everyone believes it’s going to be a V-shaped recession, but people
don’t know what they are talking about. They prefer to believe in
miracles. It’s simple math: If the Chinese economy were to shrink by 2
percent in the first quarter, it would require growth of 8 percent in
the final three quarters to reach the 6 percent annual growth rate that
everyone had expected before the virus broke out. If growth is only 6
percent from the second quarter onwards, which is a more realistic
scenario, we would see the Chinese economy only growing by 2.5 to 4
percent for the entire year. This rate would essentially mean a
recession for China and a shock to the world.
DER SPIEGEL: And your last point?....
...
.MUCH MORE
Dr. Fauci on coronavirus fears: No need to change lifestyle yet
He was asked about people wanting to go to malls,
movies, maybe the gym, and the hosts wanted to know what “should we be
changing our habits and, if so, how?”
His response was,
“Right now, at this moment, there’s no need to change anything you’re
doing on a day by day basis. Right now the risk is still low, but this
could change. I’ve said that many times even on this program. You’ve got
to watch out because although the risk is low now, you don’t need to
change anything you’re doing. When you start to see the community
spread. This could change and force you to become much more attentive to
doing things that would protect you from spread.”
He
also said
it [the virus] could be a “major outbreak,” but he hoped not, “or it
could be something reasonably controlled. At the end of the day, this
will ultimately go down.”
