Wednesday, May 12, 2010

Der Spiegel interview with Nouriel Roubini

Spiegel Online interviews economist Nouriel Roubini, who notes, "We will have even more crises in the future".

An excerpt from Nouriel on problems in Europe and government debt:

SPIEGEL: What do you think about the dangers presented by Greece?*

Roubini: Today the markets are very worried about Greece, but that's only the tip of the iceberg. Increasingly, bond market vigilantes have woken up in places like the UK and Ireland. Even the US and Japan will have problems because of their huge budget deficits. Maybe not this year, but they will eventually. In the US, states like California, Nevada, Arizona, New York and Florida have immense fiscal problems. The growing budget deficits and the huge government debts are really what worry me most.

SPIEGEL: Is it really the right thing to do for the IMF and the EU to help out Greece with €110 billion?

Roubini: That is only kicking the can down the road for a year. I am afraid that Greece, more likely than not ,isn't just illiquid, but insolvent. And providing an insolvent country with money and forcing it to make painful cuts isn't going to do it. Even if taxes are raised and spending is cut, Greece won't necessarily become more competitive. On the contrary, output might fall, unemployment might rise and market share will be lost. We need a plan B."

To hear more about plan B and Roubini's outlook on the world's economies, check out the full piece at the link above.

We'll have more on the problems in Europe and the Western economies (US, UK, et al.) tomorrow, so be sure to tune in with us then.