The period of relative relaxed in the global economy is finished and what lies ahead is an era of stagflation, which means a time of slow growth coinciding with higher unemployment and rising inflation, well-known economist and New York University professor Nouriel Roubini said on Friday.
According to Roubini, who had been among the first to predict the particular 2008 financial crisis, today’s circumstance may be even worse given the particular host of risks plus “ mega-threats ” the world is facing.
“ In the short term, there are [risks] related to the battle in Ukraine, of course , in order to inflation and to the specter of a financial crisis which could occur in the next few months or within the next two or three years. Added to this particular are mega-threats likely to appear more or less severely in the long term… starting with climate change… geopolitical tensions which could degenerate into nuclear war in between great powers, and socio-political instability, ” he or she said in an interview using the French news outlet The Monde.
Roubini, dubbed ‘ Doctor Doom’ by Wall Street, contended that the general consensus that will inflationary pressures are temporary and that raising rates can temper soaring prices and provide for a “ smooth landing ” from the economy is wrong.
“ I think the landing will not be soft but harsh, and connected with financial stress. Raising rates of interest while the economy is shedding momentum, with an overall degree of debt much higher than in the particular 1970s, could cause a failure in stock and bond markets, which could deepen the particular recession, ” this individual stated.
Based on the economist, “ section of the solution will necessarily include inflation, which reduces the debt burden. ”
“ Now i am not saying inflation is certainly desirable, but I shouldn’t see how to avoid it. The era of the great moderation is over, we are entering the great stagflation. ”
Roubini also warned of a potential trade battle between the West “ and a group of revisionist power , ” namely Russian federation, China, Iran and North Korea, “ that could lead to a fragmentation associated with globalization and a re-localization associated with production chains, increasing worldwide insecurity. ”
The economist urged the global community to learn through history and mobilize forces to prevent a further worsening of the crisis.
“ We lived such as zombies who go back to sleep despite the alarm ringing, plus who have forgotten that background is not linear… The creation of major international institutions enabled us to reconnect using a period of relative peace plus prosperity. But believing that will such an era can last is a mistake… The main stages of grief are denial, anger, depression and acceptance. If we look our problems squarely in the face, we can wake up and start mobilizing, but we’re still stuck somewhere between denial plus anger. ”