U.S. Needs More Monetary Stimulus: Roubini
New York University professor Nouriel Roubini
Munshi Ahmed/Bloomberg
New York University professor Nouriel Roubini warned in an interview that 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 warned in an interview that 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. Photographer: Munshi Ahmed/Bloomberg
The U.S. economy needs more fiscal stimulus in the short term because the economy remains weak, followed by measures to “deal with fiscal problems or you’re going to have a fiscal train wreck,” Nouriel Roubini said.
“The right solution would be to commit to a program of trying to control spending and raised taxes gradually over the next five years,” Roubini, co-founder of Roubini Global Economics, said in an interview with Bloomberg Haberturk television on the sidelines of the Aspen Ideas Festival in Aspen, Colorado.
“The trouble is we’re doing short-term drag rather than stimulus and we’re not committing to anything in the medium term, so the policy in the U.S. is not optimal,” he said.
The Federal Reserve may be pushed by weaker-than-expected or stalled growth to do something that’s not yet priced into the market, Roubini said. “This is QE3 after QE2. It’s not going to make a huge difference, but you need more monetary stimulus,” he said.
The economy is likely to be weak and fiscal issues will continue to drag down the economy, meaning “you’ll have zero rates for as far as the eye can see,” he said.
To contact the reporter on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net
To contact the editor responsible for this story: Steve Bryant at sbryant5@bloomberg.net
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