Wake up and smell the coffee, says Nouriel Roubini, the chief economist of Atlas Capital who predicted the financial crisis of 2007-09.
“A host of interconnected mega-threats is imperiling our future,” he wrote in a commentary on Project Syndicate.
“The stubbornly low inflation of the pre-pandemic period has given way to today’s excessively high inflation.”
In addition, “secular stagnation — perpetually low growth owing to weak aggregate demand —has evolved into stagflation, as negative supply shocks have combined with the effects of loose monetary and fiscal policies.”
Interest rates are soaring, “creating the risk of cascading debt crises,” Roubini sad. Deglobalization and protectionism are the rules of the day.
History Repeats Itself
“We are therefore facing not only the worst of the 1970s (repeated negative supply shocks), but also the worst of the 2007-08 period (dangerously high debt ratios) and the worst of the 1930s,” he said.
Roubini compares this era to the period between 1914 and 1945. “The first era of globalization was not sufficient to prevent the descent into world war in 1914,” he noted.
“That tragedy was followed by a pandemic (Spanish flu); the 1929 stock market crash; the Great Depression; trade and currency wars,” Roubini explained.
“It was these crisis conditions that underpinned the rise of fascism in Italy, Nazism in Germany, and militarism in Spain and Japan, culminating in World War II and the Holocaust.”
Now there…
