We may see an L-shaped greater depression later in this decade even if there is lacklustre economic recovery this year, says economist Nouriel Roubini.
by Nouriel Roubini
Channel News Asia
NEW YORK CITY: After the 2007 to 2009 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 lacklustre U-shaped recovery this year, an L-shaped “Greater Depression” will follow later in this decade, owing to 10 ominous and risky trends.
DEBT AND FISCAL STRENGTH
The first trend concerns deficits and their corollary risks: debts and defaults.