The Coming Greater Depression of the 2020s: Economist Nouriel Roubini

[appalachiablue]

- 'The Coming Greater Depression of the 2020s. - Project Syndicate, Apr 28, 2020 | By Nouriel Roubini (*See below). While there is never a good time for a pandemic, the COVID-19 crisis has arrived at a particularly bad moment for the global economy. The world has long been drifting into a perfect storm of financial, political, socioeconomic, and environmental risks, all of which are now growing even more acute. - Note, HEAVY. Excerpts, Ed.:

NEW YORK – After the 2007-09 financial crisis, the imbalances and risks pervading the global economy were exacerbated by policy mistakes. So, rather than address the structural problems that the financial collapse and ensuing recession revealed, governments mostly kicked the can down the road, creating major downside risks that made another crisis inevitable. And now that it has arrived, the risks are growing even more acute. Unfortunately, even if the Greater Recession leads to a lackluster U-shaped recovery this year, an L-shaped “Greater Depression” will follow later in this decade, owing to ten ominous and risky trends.

- The first trend concerns deficits and their corollary risks: debts and defaults...

- A second factor is the demographic time bomb in advanced economies...

- A third issue is the growing risk of deflation...

- A fourth (related) factor will be currency debasement...

- A fifth issue is the broader digital disruption of the economy. With millions of people losing their jobs or working and earning less, the income and wealth gaps of the twenty-first-century economy will widen further. To guard against future supply-chain shocks, companies in advanced economies will re-shore production from low-cost regions to higher-cost domestic markets. But rather than helping workers at home, this trend will accelerate the pace of automation, putting downward pressure on wages and further fanning the flames of populism, nationalism, and xenophobia.

- This points to the sixth major factor: de-globalization. The pandemic is accelerating trends toward balkanization and fragmentation that were already well underway. The United States and China will decouple faster, and most countries will respond by adopting still more protectionist policies to shield domestic firms and workers from global disruptions. The post-pandemic world will be marked by tighter restrictions on the movement of goods, services, capital, labor, technology, data, and information. This is already happening in the pharmaceutical, medical-equipment, and food sectors, where governments are imposing export restrictions and other protectionist measures in response to the crisis.

- The backlash against democracy will reinforce this trend. Populist leaders often benefit from economic weakness, mass unemployment, and rising inequality. Under conditions of heightened economic insecurity, there will be a strong impulse to scapegoat foreigners for the crisis. Blue-collar workers and broad cohorts of the middle class will become more susceptible to populist rhetoric, particularly proposals to restrict migration and trade.
- This points to an eighth factor: the geostrategic standoff between the US and China...
- A final risk that cannot be ignored is environmental disruption, which, as the COVID-19 crisis has shown, can wreak far more economic havoc than a financial crisis.. Recurring epidemics..Pandemics and the many morbid symptoms of climate change will become more frequent, severe, and costly in the years ahead...

More https://www.project-syndicate.org/commentary/greater-depression-covid19-headwinds-by-nouriel-roubini-2020-04

American Nouriel Roubini (aka 'Dr. Doom') is one of the few prominent economists credited with predicting the 2008 financial crisis. He is professor of economics at NYU Stern School of Business and has worked for the IMF, the US Federal Reserve, and the World Bank. https://en.wikipedia.org/wiki/Nouriel_Roubini

[progree]

1. Any resemblance between Mussolini and Cheetolini is of course unintended and merely coincidental

The backlash against democracy will reinforce this trend. Populist leaders often benefit from economic weakness, mass unemployment, and rising inequality. Under conditions of heightened economic insecurity, there will be a strong impulse to scapegoat foreigners for the crisis.

[appalachiablue]

2. Eery is what it is for sure

[BigmanPigman]

3. Where's FDR when you need him?

*I just finished watching another episode of Ken Burns's "The Roosevelts" and the Depression is on my mind even more than it had been.

https://www.pbs.org/video/roosevelts-part-5-rising-road-1933-1939/

[appalachiablue]

5. That series is excellent, I need to re-watch it. FDR was one

of the top greatest presidents; whether we can ever continue to build on the New Deal and Great Society that he and LBJ forwarded I have reservations, esp. with the conditions Roubini describes that foster nationalism, hate and xenophobia.

But major vision and execution is seriously needed now and I hope we start to move toward real structural change.

Some economists think that the rise of communism and active political forces which are now gone, and the massive upheaval caused by the Depression and WWII moved powers to grudgingly accept reforms- government intervention in the economy, establishment of a strong social safety net and advances for labor and human rights, 1930s- 1970s. A lot has changed in the last 40 years as we know.

When I worked at the National Archives in the 1990s I met Ken Burns who was giving a lecture. A very nice person-- who never ages!!

[BigmanPigman]

6. I learned that the SCOTUS was old and conservative

and later on struck down a lot of his programs as "unconstitutional". FDR was pissed and wanted age limits on the SCOTUS but everyone (even Dems in Congress) got mad at him for attempting to pack the court and his bill didn't pass. However the SCOTUS ended up allowing some of his programs to remain after he did that. He got the last word by eventually picking 8 justices while he held office.

We need to add another justice when a new Dem POTUS is in power again.

[appalachiablue]

8. To think how much of the New Deal FDR achieved because of

Dems. sweeping the House and Senate in 1932 even though he had some difficulties with the right leaning 'Hughes Court.'

We need to add to the high court, and look out for the federal courts which this admin. has filled with a massive 150 seats with the help of McConnell- the largest no. of appointments ever I think. Very serious times.

https://en.wikipedia.org/wiki/Judicial_Procedures_Reform_Bill_of_1937

PS I noticed you wrote that your ancestors dealt with the 1918 Influenza in Phila. My grandmother moved with her large family from Phila. to Richmond, c. 1898. But she always loved the City of Brotherly Love and went back to visit relatives with my mom. I've been to the city briefly about 4 times, the last time was for the spectacular Barnes Collection of modern artists I'd always wanted to see, fantastic.

[BigmanPigman]

9. The packed Fed courts will be a long term problem

and people don't realize the damage this will do in the future.

Yes, Phila has a lot of cool stuff to see while visiting. I lived in Center City for a few years in a brick row house that was over 150 years old. Everything in Phila is a "first"; the first library, the first hospital, the first animal shelter, etc. Everything is related to Franklin it seems. I had a Summer job across from Indep Hall at the Bourse Bldg (former stock exchange) and every day walking to work I passed all those historic bldgs. I became jaded quickly, like I did when I lived in Rome for a short time in Art School. July 4th was always a big deal of course and having my B-day on July 3rd was like an added bonus.

[Zorro]

4. Roubini captures where I think we are heading

and that's not a good direction.

And IMHO these disturbing trends are directly related to ignorant Republican policy positions, practices, and decisions.

[appalachiablue]

7. Absolutely, decades of wrong direction and now another

very difficult decade or so ahead as he states, a different world entirely is shaping up. It's terrifying to think of but we have to do the best we can especially for the younger generations.