4.30.2010
Is Greece Just the Tip of the Iceberg?
NYU professor and economist Nouriel Roubini, who is unfortunately often right about these things, believes that the current debt crisis in Greece is merely the start of a broader global trend toward increased inflation and sovereign defaults. It is difficult to argue with Roubini's logic, which, if followed to its natural end, would mean dramatic growth problems for the global economy. While he was one of the earliest economists to board the housing crisis train, Roubini has had some misses as well, particularly in picking the direction of the stock market. We can only hope that his latest prediction is in the latter camp rather than the former...
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I don't want to discredit Roubini- I know what he predicted and since then he's gotten a lot of attention for his accurate statements but I find it hard to believe that lightening will strike twice from the same guy. Unless he has an actual time machine I think that anything that any rock star analyst says these days has to be taken seriously and then taken with caution as there are too many indirect market variables in play right now for anyone to call it accurately. Given the odds- there is some analyst out there who will call the next year's events right on the money and that person will be hailed a genius but I thinks it's too early to say whether or not Roubini will repeat and be dead on.
ReplyDeleteGood points thought and tough to argue against- but as long as our recovery continues and we can reflate on our own the rest of the world shouldn't pose us too much danger- we're not as exposed to European debt as you might be lead to believe.
I would agree, but I think you completely overestimate the amount of "luck" in his analysis. His decisions seem to be based in economics and analytics, not just baseless feelings and emotions. His point about replacing highly leveraged banks and highly leveraged quasi government financing institutions with highly leveraged states, municipalities, and central governments is right on the money. Combine that with the utter lack of transparency and political interference at the Fed and IMF - it adds more uncertainty in my mind. This is going to come to a head soon, politicians refuse to raise taxes or interest rates and will not cut spending/enact layoffs. California is actually no different than Greece in its financial woes, look at the analytics.
ReplyDeleteHere is a teachers union protest, expect to see wayyyy more of this in the next few years, organized Marxist labor unions are behind a lot of the criminal riots in Greece:
http://biggovernment.com/kolson/2010/04/23/give-up-the-bucks-illinois-pigs-at-the-trough-demanding-more-slop-with-the-help-of-astroturf-seiu/