Roubini is WRONG

Nouriel Roubini was on Bloomberg and the interview is very interesting because as usual, he has a very good view on the economic issues. I always listen what he has to say ; but only because I am interested in his forecasts, not because I want to hear about his solutions to the problem.

He saw the collapse coming, but now, he is trying to offer solutions, and — being a Keynesian — his solutions are a lot worse than the actual problems.

Points of interest:
  • Gold is rising not because of the fear of inflation but of sovereign defaults.
    My comment: they really are the same: sovereign countries default when they don't want - or can't - print off their debt.
  • Bigger banks in the Eastern countries are too big to bail out as their size is several times the GDP of these countries. This would force the EU to act and for example he suggests, taxes could go up in Germany to pay for the bailouts.
    My comment: I think Roubini is confused , since most of the Eastern European Countries ARE NOT YET part of the Eurozone, and are in deep trouble. Only 16 countries are currently in the Eurozone. Some big European banks have lent a lot to ex-USSR countries, but that's another problem.
  • Fiscal stimulus is required to help collapsing private demand, and this is what got the US out of the Great Depression.
    My comment: It's actually quite the opposite of what happened, and the US got out of the Great Depression in spite of the destructive power of Hoover and Roosevelt. Check for yourself by reading Rothbard's America's Great Depression.
  • The US is ahead of the curve because they are spending a lot and a lot.
    My comment: again, this is non-sense, they are not ahead of anything, they are in very deep trouble, and they are going deeping and deeping into the whole, and are trying to take as many countries are as they can with them, by borrowing from them and hence destroying their savings, since the US will not be able to pay back what they borrow.
I recommend watching the interview nonetheless.


NMMM.NU said...

Rubini has lot of appereances, because the governments like him. Why because his solution is same as governments like to be - spending. I agree that spending can fix the crysis, but it will lead to hyperinflation.

I am from East European country - Bulgaria, but our currency is peg to the EUR, so we did not feel any pain related to currency fall. However, I believe he speaks EU or IMF to pour money into East Europe, in such case it will be not too big to fail, actually it will be not that much money (billion there, billion here).

About gold - I have one very important comment, which I will write on my blog later. I was guest in a friends family. The man working in a bank (I guess you can call him a banker). He recenly move his money in government bonds (which is unusual for Bulgaria), so we began a conversation for the eventual deflation or inflation in Bulgaria and in USA. His comment was

he - "How you can tell me that money supply in USA grows, when their staistics show lower CPI and PPI?"
me - "do you believe the data?"
he - "Yes, is official data"
me - "Have you ever hear or saw shadowstats.com website?"
he - "No, what is it"
me - "Is alternative measure of CPI, according Carter's staistical institute. Have you ever try to find oppinions if US CPI is correct or understated/overstated"
he - "No"
me - "Then why do you think is correct"
he - "Because is official".

Later I giveI understood that he do not understand what gold standard is - according to him gold standard is when you have commodity - gold, and gold price fluctuating against the currency, and central bank gives you gold according todays exchage rate.

Now I agree, that the situation is much more worse, than I anticipated, aslo obviously gold is not money.

pej said...

Yes, I have had somehow similar discussions with many friends, who are quite bright in their fields anyway, but they are enough open-minded to understand what is currently unraveling.

I am writing my blog and haven't told any of friends about it. People should try to dig for themselves, they won't listen otherwise.

To me, most people are living the matrix and are not worth wasting my time saving them. Like all these Keynesian fools :-)