Tag Archives: nouriel roubini

Australian Media 4 Months Late On China Bust Warning

26 Oct

Top feature story at The Australian today:

‘Hard landing’ coming in China, warns Nouriel Roubini

AUSTRALIA faces the threat of a “hard landing” in China within two years and the growing risk of being hit by a double-dip global recession sparked by the European debt crisis, one of the world’s leading economists said yesterday.

Nouriel Roubini, from New York University and widely known as “Dr Doom” for predicting the global financial crisis of 2008, told the opening day of the Commonwealth Heads of Government Meeting business forum in Perth that China’s economic growth model was unsustainable, and he predicted a sharp slowdown in 2013.

The downturn would have a “major effect” on Australia by driving down commodity prices and denting economic growth.

As reported on barnabyisright.com way back in June:

China’s Economy At Risk Of “Hard Landing”, 60% Chance of Banking Crisis By Mid-2013

Nouriel Roubini, one of the dozen or so economists who predicted the GFC, has just given an ominous warning for all those – like Wayne Swan, the Treasury department, former Treasury secretary (and now personal adviser to Gillard) Ken Henry, and the RBA – who are blindly banking on a never-ending China boom, with continuous record high terms-of-trade, to get us out of their $1.59 million per hour Interest-only debt hole.

The Australian mainstream media continues its fine record of keeping us ill- and under-informed.

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Economist Who Predicted The GFC Warns Of “Perfect Storm”

15 Jun

From Bloomberg:

A “perfect storm” of fiscal woe in the U.S., a slowdown in China, European debt restructuring and stagnation in Japan may converge on the global economy, New York University professor Nouriel Roubini said.

“There are already elements of fragility,” he said. “Everybody’s kicking the can down the road of too much public and private debt. The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest.”

Nouriel Roubini is the New York University professor who came to fame as one of the dozen or so economists – including Australia’s own Dr Steve Keen – who predicted the GFC.

Mind you, he was running a little late. Dr Keen began publicly warning of a GFC in December 2005.  Roubini issued his warnings from mid-late 2006.

Now he’s running a little late again, with this warning of a “perfect storm”.

Barnaby Joyce began warning of the risk of “economic Armageddon” nearly 18 months ago. And for exactly the same reasons – rising levels of public and private debt in the USA, and around the world.

It’s worth taking a minute or two to clearly recall just what Barnaby had to say.

From the Brisbane Times, October 23, 2009 (emphasis added):

The Nationals Senate leader Barnaby Joyce is openly canvassing an economic upheaval that would dwarf the current global financial crisis, triggered by the US defaulting on its sovereign debt within the next few years.

In unusually pessimistic comments for a senior political figure, Senator Joyce said the US Government was running such large deficits and building up so much debt that it was in a similar position to Iceland or Germany before World War II.

In a Senate estimates hearing on Wednesday night, he asked Treasury secretary Ken Henry what would be the implications of an American debt default for the Australian economy.

Dr Henry warned that canvassing extreme scenarios could alarm the community.

”I don’t mind discussing hypotheticals in general … [but] one has to be careful not to discuss publicly hypotheticals that are that extreme,” Dr Henry said.

”I don’t, myself, consider that outcome to be a high probability outcome, certainly not one that I would want to say much about in a public forum.”

But Senator Joyce insisted yesterday that the dangers to the global economy from the run-up in US private and public sector debt were real and should be debated.

”It is the elephant in the room,” Senator Joyce said. ”This is a huge risk that Australia faces. What is the game plan, what happens if it comes unstuck?

And from the Sydney Morning Herald, December 11, 2009 (emphasis added):

The Opposition finance spokesman, Barnaby Joyce, believes the United States government could default on its debt, triggering an ”economic Armageddon” which will make the recent global financial crisis pale into insignificance.

Senator Joyce told the Herald yesterday he did not mean to alarm the public but there needed to be a debate about Australia’s ”contingency plan” for a sovereign debt default by the US or even by a local state government.

”A default by the US means complete economic collapse around the world and the question we have got to ask ourselves is where are we in that,” Senator Joyce said.

His warning came as the Rudd Government ramped up its attack on Senator Joyce as an economic extremist…

Senator Joyce said the chances of a US debt default were distant but real and politicians were not doing the electorate a favour by refusing to acknowledge the risk.

Senator Joyce said that if the US recovered, global funds would flow back into North America. ”There will be only one way Australia will be able to keep funds here and that is by putting up interest rates, which will therefore bring real costs back to households,” he said.

”That is the first scenario, which is extremely bad for Australia. The worse scenario is where the US doesn’t repay its debt – the $2 trillion in debt it owes to the Chinese, the $1 trillion in debt it has to the Japanese and the $US1 trillion in debt to others – and then we are really nailed.

”The outcome is a shift away from the US dollar as the international trading currency and a shift to the Chinese yuan, and China becomes an immensely powerful player overnight.

”It’s the real financial crisis, and the real financial crisis will mean this preamble we have just had pales into insignificance.”

Asked what sort of contingency plan he would advocate, Senator Joyce said it was like trying to prepare for a tidal wave but the local economy should have more self-reliance.

”Things you look for in that economic Armageddon are the capacity to feed ourselves, the capacity to provide the fundamentals in medicines and basic fundamental requirements for our nation.”

Barnaby was right.

And noone took any notice.  18 months later, Australia has no contingency plan.  Just a dramatically weakened government financial position.

This blog was created for the express purpose of sourcing and sharing information from around the world, in support of Barnaby’s prophetic warning.

If you browse the pages here, especially over the past month or so, you will find many news articles referencing the US debt default crisis.

Watch and listen to this interview just 8 days ago, where respected US congressman and 2012 Presidential Candidate Ron Paul, the Chairman of the House Financial Services Subcommittee on Domestic Monetary Policy, openly confirmed that the US is defaulting on its debts.

The big risk event that Barnaby predicted was “distant but real” in late 2009 … is happening right now.

Barnaby was mocked and ridiculed out of his new job as Opposition Finance spokesman, for daring to speak out. For daring to talk publicly about risks contrary to the “received wisdom” of the “experts”.

Who were those “experts”?

Let’s begin a Name ‘n Shame list of all the pompous, know-it-all cretins who now owe Barnaby a wimpering, grovelling apology.

Naturally, we’re talking about the likes of former Treasury secretary (and now unconstitutionally-appointed personal adviser to Gillard) Ken “The GFC is over” Henry.

RBA Governor Glenn “I don’t know anyone who predicted the GFC” Stevens.

Treasurer Wayne “Half a million new jobs” Swan.

And former Finance Minister Lindsay “dark arts” Tanner.

And, pretty much the entire Canberra press gallery.

They were all wrong. Totally, utterly, catastrophically wrong.

Time is proving our country accountant Senator from Queensland to be a veritable modern day prophet.

With more wisdom, commonsense, foresight, and courage, than the entire Labor Party, Treasury department, RBA Board of governors, and Canberra press pack of financial “journalists” combined.

So let us all pay close heed to his most recent warning – that the government plans to steal our super to pay down debt.

Barnaby is right.

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Final Proof That RBA Governor Glenn Stevens Is Either A Liar, Or A Blithering Idiot

13 Jun

Illustration - John Shakespeare

Reserve Bank of Australia Governor Glenn Stevens has been criticised at this blog previously:

Stevens’ Nonchalance ‘Stunning’

Stevens: ‘Risk Of Serious Contraction’ Passed

Stevens’ Australia’s Most Useless?

Now, conclusive proof that our Guv’na … who earns $1.05 million per annum, including a $234,000 pay rise at the peak of the GFC … is an ignorant, incompetent, ivory-towered #JAFA who should be sacked immediately, if not sooner.

From the RBA’s own website, behold! Stevens’ official speech to the Australian Business Economists Annual Dinner, Sydney, 9 December 2008.  That’s right around the time that you, dear reader, were cr@pping yourself about the imploding global sharemarket … and he was enjoying a $234,000 pay rise.

Let’s see what he had to say about the Global Financial Crisis, and the events leading to it (emphasis added):

Many people have said to me recently that the times are ‘interesting’. My response has been that they are, perhaps, a little too interesting. I need not remind this audience of the international financial turmoil through which we have lived over the past almost year and a half, nor of the intensity of the events since mid September this year, in particular.

I do not know anyone who predicted this course of events. This should give us cause to reflect on how hard a job it is to make genuinely useful forecasts. What we have seen is truly a ‘tail’ outcome – the kind of outcome that the routine forecasting process never predicts.

Mr Stevens, you are either a liar.

Or, you are a blithering idiot.

Here’s a paper referencing more than a dozen international economists who all predicted and forewarned of the GFC for years in advance, and propounded cogent analyses as to why a GFC was coming. One of them, Australia’s own Dr Steve Keen, won an award voted on by his international economic peers for having done so:

This paper presents evidence that accounting (or flow-of-fund) macroeconomic models helped anticipate the credit crisis and economic recession. Equilibrium models ubiquitous in mainstream policy and research did not.

[* So is it any wonder then, that our much-ridiculed accountant in the Parliament, Senator Barnaby Joyce, is always the only one on the ball when it comes to correctly predicting the risks of what is coming?]

Indeed, here’s Dr Keen on our national broadcaster’s premier political program, The 7:30 Report, way back in November 2007 – 10 months before the Lehman Bro’s collapse kicked off the GFC main event – talking about the RBA’s latest interest rate increase, and warning of the dangers of high household debt levels:

So right there is one prominent Australian economist, who was loudly and very publicly forewarning of a coming GFC. For 3 years prior!

Indeed, lots of other, ordinary people like me saw the GFC coming too, and so were able to protect themselves from the financial devastation.

Devastation that you, Mr Stevens, somehow could not see coming.

You say, “I do not know anyone who predicted this course of events”.

Well mate, our taxes say it’s your #&^%! $1.05 million job to know!

Millions of good, decent, trusting Aussies lost hundreds of billions from their retirement savings, thanks to a GFC that jumped-up, mainstream-theory-blinkered imbeciles like you couldn’t see coming.  When so many others – little people, with simple commonsense – did.

You are a national disgrace. And your Million Dollar Man salary, a despicable waste of taxpayers money.

Sack Glenn Stevens now.

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China’s Economy At Risk Of “Hard Landing”, 60% Chance of Banking Crisis By Mid-2013

12 Jun

Nouriel Roubini, one of the dozen or so economists who predicted the GFC, has just given an ominous warning for all those – like Wayne Swan, the Treasury department, former Treasury secretary (and now personal adviser to Gillard) Ken Henry, and the RBA – who are blindly banking on a never-ending China boom, with continuous record high terms-of-trade, to get us out of their $1.59 million per hour Interest-only debt hole.

From Bloomberg, 11 June 2011:

China’s economy is at risk of a “hard landing” after 2013 as efforts to spur growth through investment cause excess capacity, said Nouriel Roubini, the New York University professor who predicted the financial crisis.

“China is now relying increasingly not just on net exports but on fixed investment” which has climbed to about 50 percent of gross domestic product, Roubini said in Singapore today. “Down the line, you are going to have two problems: a massive non-performing loan problem in the banking system and a massive amount of overcapacity is going to lead to a hard landing.”

The nation faces a 60 percent chance of a banking crisis by mid-2013 in the aftermath of record lending and surging property prices, according to Fitch Ratings. A record $2.7 trillion of loans extended over two years has pushed property prices in China to all-time highs even as authorities set price ceilings, demanded higher deposits and limited second-home purchases.

Anything else?

There is increasing evidence of a potentially “excessive” slowdown in the world economy and crude prices may climb to as much as $150 per barrel if unrest in major oil-producing nations intensifies, Roubini said.

Roubini in July 2006 predicted a “catastrophic” global financial meltdown that central bankers would be unable to prevent. The collapse of Lehman Brothers Holdings Inc. in 2008 sparked turmoil that led to the worst financial crisis since the 1930s.

Oops.

There goes the neighbourhood.

And your super.

Hmmm, what was that warning Barnaby gave us around a year ago? Something about “a bigger GFC”?

Barnaby is right.

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Roubini: Rising Sovereign Debt Leads to Defaults

30 Apr

Nouriel Roubini, one of just a dozen economists who publicly forecast the GFC, and who recently declared that ‘risky rich’ countries are in greatest danger of default, comments again on the rapidly spreading sovereign debt crisis (from Bloomberg):

Nouriel Roubini, the New York University professor who forecast the U.S. recession more than a year before it began, said sovereign debt from the U.S. to Japan and Greece will lead to higher inflation or government defaults.

“The bond vigilantes are walking out on Greece, Spain, Portugal, the U.K. and Iceland,” Roubini, 52, said yesterday during a panel discussion on financial markets at the Milken Institute Global Conference in Beverly Hills, California. “Unfortunately in the U.S., the bond-market vigilantes are not walking out.”

“The thing I worry about is the buildup of sovereign debt,” said Roubini, a former adviser to the U.S. Treasury and IMF consultant, who in August 2006 predicted a “painful” U.S. recession that came to fruition in December 2007. If the problem isn’t addressed, he said, nations will either fail to meet obligations or see faster inflation as officials “monetize” their debts, or print money to tackle the shortfalls.

Roubini, who teaches at NYU’s Stern School of Business, told attendees at the Beverly Hilton hotel that “Greece is just the tip of the iceberg, or the canary in the coal mine for a much broader range of fiscal problems.”

“Eventually, the fiscal problems of the U.S. will also come to the fore,” Roubini said during the panel discussion. “The risk of something serious happening in the U.S. in the next two or three years is going to be significant” because there’s “no willingness in Washington to do anything” unless forced by the bond markets.

Barnaby Joyce began trying to draw attention to the dangers of growing sovereign debt – warning of a coming day of reckoning in the USA and Europe and here in Australia – as far back as October 2009. As I have shown in countless posts on this blog, many leading economists, financiers, and informed commentators in other countries have been raising almost exactly the same concerns as Barnaby.

Few in Australia chose to listen.

Instead, Barnaby was ridiculed by the government and the media for every minor gaffe or slip of the tongue, his every statement misquoted or twisted out of context. With the ultimate result that he lost his position as opposition Finance spokesman thanks to the relentless attacks on his economic credibility. Despite his being better qualified to comment on finance than the entire Rudd Government economic team.

Only weeks later, those who do choose to look and listen can see ever more clearly… Barnaby Is Right.

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Roubini: ‘Risky Rich’ Countries in Greatest Danger of Default

26 Feb

New York University Professor Nouriel Roubini – famous for having predicted the GFC in 2006 – again defies the so-called ‘conventional wisdom’ by warning that it is the “risky rich” countries who are in greatest danger of sovereign debt default:

Today’s swollen fiscal deficits and public debt are fueling concerns about sovereign risk in many advanced economies. Traditionally, sovereign risk has been concentrated in emerging-market economies. After all, in the last decade or so, Russia, Argentina, and Ecuador defaulted on their public debts, while Pakistan, Ukraine, and Uruguay coercively restructured their public debt under the threat of default.

But, in large part – and with a few exceptions in Central and Eastern Europe – emerging-market economies improved their fiscal performance by reducing overall deficits, running large primary surpluses, lowering their stock of public debt-to-GDP ratios, and reducing the currency and maturity mismatches in their public debt. As a result, sovereign risk today is a greater problem in advanced economies than in most emerging-market economies.

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