Renowned Economist Nouriel Roubini, says that unless world governments release massive new fiscal stimulus, there will be another Great Depression, possibly within one year.
Roubini, who predicted the 2008 crash and has been predicting a double dip recession for some time, has even revised his previous “perfect storm” prediction for 2013 and now suggests that a grave economic downturn is even closer.
“I thought a few months ago that the perfect storm would be 2013, but now, the economic weakness in the U.S., eurozone and U.K. is front-loaded.” Roubini told Bloomberg News.
“So we’re going to double-dip earlier. The climax of it could be 2013 or it could be already earlier.” Roubini added.
Earlier this month, the economist, often dubbed Dr Doom owing to his stark and bearish financial predictions, stated that he feels there is a 60 percent probability of recession in early 2012.
“There’ll be more monetary easing and quantitative easing done by the Fed and other central banks, but the credit channel is broken.” Roubini told Bloomberg.
Roubini has warned that the world’s developed economies are trapped in a more dangerous place than in 2008, owing to the “stall speed” of low growth and a dearth of potential political solutions.
“Things are getting worse, and the big difference between now and a few years ago is that this time around, we’re running out of policy bullets.” Roubini said.
In a piece in the Financial Times last month, the economist noted that the recent media driven impression of a short term “recovery” was a “delusion that has been dashed.”
“America’s recent data have been lousy: there has been little job creation, weak growth and flat consumption and manufacturing production. Housing remains depressed. Consumer, business and investor confidence has been falling, and will now fall further.”
“Until last year policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery.” Roubini writes. “Zero policy rates, QE1, QE2, credit easing, fiscal stimulus, ring-fencing, liquidity provision to the tune of trillions of dollars and bailing out banks and financial institutions – all have been tried. But now we have run out of rabbits to reveal.” he added.
The New York University professor,stated that he believes avoiding another severe recession is tantamount to “mission impossible”.
“In the short term, we need to do massive stimulus; otherwise, there’s going to be another Great Depression…”
“You need to restore economic growth, not five years from now. You need to restore it today.” the economist added.