Connect with us

Hi, what are you looking for?

News

‘The Mother of All Economic Crises Looms,’ Warns Economist Nouriel Roubini

Economist Nouriel Roubini has warned about an impending economic crisis in the global economy that policymakers will likely not be able to handle.

Following the explosion of leverage, borrowing, and deficits in recent decades, the world economy is now moving toward an “unprecedented confluence” of financial, debt, and economic crises, Roubini warned in a Dec. 2 article for Project Syndicate. Households, corporations, financial entities, governments, pension plans, and so on are now burdened with massive amounts of debt that will only “continue to grow as societies age.”

Total private and public sector debt as a share of GDP rose to 350 percent in 2021 from 200 percent in 1999. In the United States, this stands at 420 percent, while in China it is at 330 percent.

The unsustainable debt ratios turned many borrowers like banks, corporations, households, nations, shadow banks, and governments into “insolvent zombies.” The low interest rates in the past years helped keep this trend alive.

But with elevated inflation, the “financial Dawn of the Dead” has ended, Roubini observes. As the Fed raises interest rates to combat inflation, the “zombies” are facing a sharp rise in debt servicing costs. Roubini was senior adviser to Obama-era Treasury Secretary Timothy Geithner.

Since January, the Federal Reserve has pushed up its benchmark interest rate from 0.25 percent to a range of between 3.75 percent and 4 percent.

“For many, this represents a triple whammy, because inflation is also eroding real household income and reducing the value of household assets, such as homes and stocks,” the economist wrote.

“The same goes for fragile and over-leveraged corporations, financial institutions, and governments: they face sharply rising borrowing costs, falling incomes and revenues, and declining asset values all at the same time.”

These developments are happening amidst the return of stagflation, a situation of weak economic growth and high inflation. Unlike the 2008 financial crisis and the COVID-19 crisis, bailing out private and public entities will only end up pouring “more gasoline on the inflationary fire.”

This means that there will be a “deep, protracted recession” on top of an intense financial crisis. “The mother of all economic crises looms, and there will be little that policymakers can do about it,” Roubini warns.

A similar negative prediction for the American economy was also made by Harvard professor Larry Summers in a recent interview with Bloomberg.

Summers, who also served under Obama, pointed out that it will become much harder to bring inflation down without a recession because at a certain point, consumers will run out of their savings, which will reduce consumption. This means that the economic downturn will be “fairly forceful.”

“When the unemployment rate goes up by 0.5 percent, it goes up by more than 2 percent. And that’s because once you get into a negative situation, there’s an avalanche aspect. And I think we have a real risk that that’s going to happen at some point,” Summers said.

READ 7 COMMENTS
  • SKULLBUSTER says:

    THE GOVERNMENT HAS ROLLED OUT TRILLIONS UPON TRILLIONS OF DOLLARS AND PUT THEM INTO THE FINANCIAL WORLD! THE BOTTOM LINE IS THE U.S. IS BANKRUPT!! THESE DEMOCRATIC GIVE AWAY PROGRAMS HAVE HAD THE MONEY STOLEN FROM THEM BY THE BILLIONS EVERY MONTH!! THE BIDEN CRIME FAMILY IS LAUNDERING THIS MONEY INTO THEIR PERSONAL BANK ACCOUNTS IN THE CAYMAN ISLANDS! AND YOU THE AMERICAN TAXPAYER CONTINUES TO PAY FOR THESE HUGE PROGRAMS WE WILLNEVER BE ABLE TO PAY BACK! YET YOU VOTE THESE WORTHLESS CONGRESSMEN BACK INTO OFFICE YEAR AFTER YEAR ! THIS IS HOW FUCKIN STUPID A U.S VOTER IS!!!!!

    • Demo=Destroy says:

      Also they use our money they steal to payoff whoever is needed to assure they have the elections totally rigged even when they really lose!! Total Corruption Is How These Devilcrats Operate!!! They should all be Shot between their devil peepers

  • Louis Galmarini says:

    Roubini was senior adviser to Obama-era Treasury Secretary Timothy Geithner.

    Say no more. Roubini is just another liberal asshole w/ the eternal screaming of ‘the sky is falling!’.

    • 1stAand2ndA says:

      If you think that 420% debt ratio for our GDP is handleable or even recoverable you know nothing about economics. You keep watching ABC and everything’s just fine.

  • John says:

    The global elitist moron pedophiles and communists one world order pigs should know that because they are the satanic communist Antichrist pigs that caused it , I can’t wait for fed up the people in the streets to get our hands on these ELETIST Democrat communist government N.W.O. demons and give them the Justice they deserved and earned

  • Scurvydog says:

    The only people that will come out of the economic disaster unscathed are the wealthy elite. You know, the ones who are benefiting from the high inflation, while the common working people are losing their ability to stay above water. In the NWO, the elite will call the shots, just like they do now, except with force. There will be no free markets, and if people don’t literally worship the government, they will be eliminated. They will not be able to buy, sell, or trade..which means no food, clothing, shelter, medical care, etc. And guess what? There is not one thing we can do to stop what is coming. Why? Because the Creator of the universe and all things in it has foretold it. If you want to avoid the coming hard times of human government, accept Jesus Christ as your savior today!

  • TOP STORIES

    News

    Two-time PGA Tour winner Grayson Murray died Saturday at the age of 30, the PGA Tour announced. Murray’s family released a statement Sunday noting...

    News

    An “unprovoked” stabbing spree was carried out by a man donning a wig in Braintree, Massachusetts, on Saturday, police said, leaving four minor girls...

    News

    Bill Maher and Megyn Kelly got into a tense argument over her support for former President Donald Trump and how much emphasis should be...

    News

    On Saturday evening, former President Donald Trump attended the Libertarians’ National Convention in the Washington Hilton Hotel and it went about as anyone would...

    >