Economist Roubini on Soverign Debt
Well Mr. Roubini, economist of some standing, says that the build up on country debt is way out of hand and just raising taxes won’t be enough to pay it back!!
This guy predicted the recession a year before it began! Gerald Celente is much more vocal and says it is truly MELTDOWN time.
Here we go again….
Roubini Says Rising Sovereign Debt Leads to Inflation, Defaults
By Vivien Lou Chen
April 28 (Bloomberg) — Nouriel Roubini, the New York University professor who predicted the U.S. recession more than a year before its start in December 2007, said rising sovereign debt from the U.S. to Japan and Greece will ultimately lead to higher inflation or government defaults.
“While today markets are worried about Greece, Greece is just the tip of the iceberg,” Roubini, 52, said today during a discussion on financial markets at the Milken Institute Global Conference in Beverly Hills, California. Increasing tax revenue won’t be enough “to save the day.”
Roubini’s remarks underscore statements by officials such as Dominique Strauss-Kahn, managing director of the International Monetary Fund, that the global economy still faces risks. Credit-rating cuts on Greece, Portugal and Spain in the past two days are spurring investors’ concern that the European deficit crisis is spreading and intensifying pressure on policy makers to widen a bailout package.
“The thing I worry about is the buildup of sovereign debt,” Roubini, who teaches at NYU’s Stern School of Business, told attendees at the Beverly Hilton hotel. If the issue isn’t addressed, nations will either fail to meet obligations or experience higher inflation as officials “monetize” their debts, or print money to tackle the shortfalls.
Michael Milken, founder of the Milken Institute, said the U.S. has the ability to continue selling private and public debt because its markets remain liquid.
“I would say it is individual leadership’s fault if they are not taking advantage of today’s markets,” Milken, the junk- bond billionaire turned philanthropist, said on the panel moderated by Matt Winkler, editor-in-chief of Bloomberg News.
Debt Crisis
The Stoxx Europe 600 Index fell 1.3 percent to 258.24, a six-week low, after Standard & Poor’s downgraded Spain’s debt by one step to AA. The euro traded at $1.3205 at 4:02 p.m. in New York, compared with $1.3175 yesterday, after touching $1.3115, the lowest since April 28, 2009.
Almost $1 trillion of worldwide equity value was erased yesterday on concern that rising public debt will spur defaults, derailing the global economy, data compiled by Bloomberg show. German Chancellor Angela Merkel and the IMF pledged to step up efforts to overcome the Greek fiscal crisis, after bonds and stocks plunged across Europe in the past week.
Roubini predicted a bubble in U.S. housing prices during an interview with Bloomberg News in October 2005, months before the market peaked, and said in August 2006 that he expected a “painful” recession.
Subprime Warning
In May 2007, the economics professor said problems in the subprime-mortgage market were worsening and spreading, while Federal Reserve officials were saying the damage was contained.
Roubini, chairman and co-founder of Roubini Global Economics LLC in New York, was previously a senior economist for the White House Council of Economic Advisers during the Clinton administration, an adviser to the U.S. Treasury Department and a consultant to the IMF.
Milken, 63, is the former high-yield bond chief from Drexel Burnham Lambert Inc. who was indicted on 98 counts of racketeering and securities fraud in 1989, ultimately serving about two years after a plea bargain and sentence reduction. For the past decade, he has focused on philanthropy and running the research institute, which seeks ways to generate capital for people around the world.
To contact the reporter on this story: Vivien Lou Chen in Los Angeles at vchen1@bloomberg.net
Last Updated: April 28, 2010 16:58 EDT
Be prepared financially (gold and silver), some food and seeds and how about that garden? It is spring time after all!
