Электронная книга: Nouriel Roubini «Inflated. How Money and Debt Built the American Dream»

Nouriel Roubini (born 29 March 1959) is an American economist. He claims to have predicted both the collapse of the United States housing market and the worldwide recession which started in 2008. He teaches at New York University's Stern School of Business and is the chairman of Roubini Global Economics, an economic consultancy firm.

The child of Iranian Jews, he grew up in Italy. After receiving a BA in political economics at Bocconi University, Milan and a doctorate in international economics at Harvard University, he became an academic at Yale and a practicing economist at the International Monetary Fund (IMF), the Federal Reserve, World Bank, and Bank of Israel. Much of his early research focused on emerging markets. During the administration of President Bill Clinton, he was a senior economist for the Council of Economic Advisers, later moving to the United States Treasury Department as a senior adviser to Timothy Geithner, who in 2009 became Treasury Secretary.

Roubini's critical economic views have earned him the nicknames "Dr. Doom" and "permabear" in the media.^[1] In 2008, Fortune magazine wrote, "In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage".^[2] The New York Times notes that he foresaw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt".^[1] In September 2006, he warned a skeptical IMF that "the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession". Nobel laureate Paul Krugman adds that his once "seemingly outlandish" predictions have been matched "or even exceeded by reality."^[3]

As Roubini's descriptions of the current economic crisis have proven to be accurate, he is today a major figure in the U.S. and international debate about the economy, and spends much of his time shuttling between meetings with central bank governors and finance ministers in Europe and Asia.^[1] Although he is ranked only 512th in terms of lifetime academic citations,^[4] he was #4 on Foreign Policy magazine's list of the "top 100 global thinkers."^[5] He has appeared before Congress, the Council on Foreign Relations, and the World Economic Forum at Davos.

Early life and education

Nouriel Roubini was born in Istanbul, Turkey, to Persian Jewish parents.^[1] When he was an infant, his family lived briefly in Iran and Israel. From 1962 to 1983 he resided in Italy where he attended Bocconi University in Milan, earning a B.A., summa cum laude, in economics. He received his Ph.D. in international economics from Harvard University in 1988, where his adviser was Jeffrey Sachs.^[1] He is a U.S. citizen and speaks English, Persian, Italian, and Hebrew.^[6]

Career

For much of the 1990s, Roubini combined academic research with policy making by teaching at Yale and then in New York, while also being employed at the International Monetary Fund, the Federal Reserve, World Bank, and Bank of Israel. Currently, he is a professor at the Stern School of Business at New York University. Long study of emerging market blowouts in Asia and Latin America helped him spot the looming disaster in the U.S. "I’ve been studying emerging markets for 20 years, and saw the same signs in the U.S. that I saw in them, which was that we were in a massive credit bubble," he said.^[7]

By 1998, he joined the Clinton administration first as a senior economist in the White House Council of Economic Advisers and then moved to the Treasury department as a senior adviser to Timothy Geithner, then the undersecretary for international affairs, who in 2009 became Treasury secretary in the Obama administration.^[7]

Roubini returned to the IMF in 2001 as a visiting scholar while it battled a financial meltdown in Argentina. He cowrote a book on saving bankrupt economies entitled, Bailouts or Bail-ins? and launched his own consulting firm.

Role models

He credits a number of economists for his understanding of economics. He said, "One person who has had a great impact on me intellectually was my adviser at Harvard, Jeffrey Sachs. For me he’s the model of a great intellectual. He is both a rigorous academic and very human, involved in big picture issues such as poverty, AIDS, and Africa. He’s someone with a great mind that is also very engaged with the world. Another intellectual hero is Larry Summers, the former President of Harvard, an amazing intellectual and academic, who is very deeply involved with the policy world. I worked for him for many years in the US Treasury during the Clinton Administration".^[8]

Global nomad

He likes to refer to himself as a "global nomad", and says, "You can be sitting still surfing the Internet, and experience other worlds, ideas and societies. But I’ve found that there is nothing better than visiting a different country, even if for three days. ... you can’t only be a virtual Global Nomad, with goggles on, in a virtual reality. You have to be there. You have to see it, smell it and live it. You have to see people, travel, and interact."^[8]

Partly to fulfill this need, he became chairman of RGE, an economic consultancy for financial analysis. In describing the purpose of RGE Monitor, he said, "the world is my home, so everything about society and culture—no matter how miniscule—is worth knowing. I am an information junkie and created RGE Monitor to collect information about what’s happening around the world."^[8]

Speaking of his early influences, Roubini said, "I was born into a relatively orthodox Jewish family in Iran, lived in Israel and Turkey, and then moved to Italy as a child. By the age of six, instead of going to a yeshiva, I went to a secular Jewish school where I interacted with kids from all sorts of different backgrounds. Had I gone to an orthodox Jewish school, I would perhaps be orthodox now and may have never become a Global Nomad."^[8]

Personal investments

During an interview in June 2009, he was asked about his personal lifestyle expenses and other investments. He said, "I regularly save about 30% of my income. Apart from my mortgage, I don’t have any other debts. The credit crunch hasn’t affected me much. . . . I’ve always lived within my means and, luckily, have never been out of work. I would say I’m a frugal person—I don’t have very expensive tastes. . . . You don’t need to spend a lot to enjoy things."^[6]

Asked whether he invests in stocks, he replied, "Not as much these days. I used to have a lot in equities—about 75%—but over the past three years, I’ve had about 95% in cash and 5% in equities. You’re not getting much from savings these days but earning 0% is better than losing 50%. . . . I don’t believe in picking individual stocks or assets. . . . Never invest your money as though you are gambling at the casino. Buying and selling individual stocks is a waste of time."^[6]

Economic forecast

U.S. economy

In the 1990s, Roubini studied the collapse of emerging economies. He used an intuitive, historical approach backed up by an understanding of theoretical models to analyze these countries and came to the conclusion that a common denominator was the large current account deficits financed by loans from abroad. Roubini theorized that the United States might be the next to suffer, and as early as 2004 began writing about a possible future collapse.^[1] Business Week magazine writer Michael Mandel, however, noted in 2006 that Roubini and other economists often make general predictions which could happen over multiyear periods.^[9]

In September 2006, he foresaw the end of the real estate bubble: "When supply increases, prices fall: that’s been the trend for 110 years, since 1890. But since 1997, real home prices have increased by about 90 percent. There is no economic fundamental—real income, migration, interest rates, demographics—that can explain this. It means there was a speculative bubble. And now that bubble is bursting." In the Spring 2006 issue of International Finance, he wrote an article titled "Why Central Banks Should Burst Bubbles"^[10] in which he argued that central banks should take action against asset bubbles. When asked whether the real estate ride was over, he said, "Not only is it over, it’s going to be a nasty fall."^[11]

By May 2009, he felt that analysts expecting the U.S. economy to rebound in the third and fourth quarter were "too optimistic".^[12] He expected the full recession to last 24 or 36 months, and believed in the possibility of an "L-shaped" slow recovery that Japan went through in The Lost Decade.^[13]

In his opinion, much of the current recession's cause is due to "boom-and-bust cycles," and he feels the U.S. economy needs to find a different growth path in the future. "We’ve been growing through a period of time of repeated big bubbles," he said. "We’ve had a model of 'growth' based on overconsumption and lack of savings. And now that model has broken down because we borrowed too much." He feels that too much human capital went into financing the "most unproductive form of capital, meaning housing" and would like to see America create a model of growth in more-productive activities. He feels that "sustainable growth may mean investing slowly in infrastructures for the future, and rebuilding our human capital," by investing in renewable resources. "We don’t know what it’s going to be," he says, "but it’s going to be a challenge to find a new growth model. It’s not going to be simple."^[14]

Recovery from recession

In August 2009, Roubini predicted that the global economy would begin recovering near the end of 2009, but the U.S. economy is likely to grow only about one percent annually during the next two years, which is less than the three percent normal "trend."^[15] He noted that the Fed is "now embarked on a policy in which they are in effect directly monetizing about half of the budget deficit," but that as of now "monetization is not inflationary," as banks were holding much of the money themselves and not relending it. When these attitudes reverse at the end of the recession, that would be time for an "exit strategy, of mopping up that liquidity" and taking some of the money back out of circulation, "so it doesn’t just bid up house prices and stock values in a new bubble. And that will be 'very, very tricky indeed,'" he stated.^[14]

Also, in late July, he warned that if no clear exit strategy is outlined and implemented, there was the potential of a perfect storm: fiscal deficits, rising bond yields, higher oil prices, weak profits, and a stagnant labor market, which combined could "blow the recovering world economy back into a double-dip recession."^[15]

Global economy

2006

In 2006 Roubini predicted that Italy, and possibly a series of other eurozone countries (Portugal, Spain, Greece) might have to exit the eurozone if they did not implement "serious economic reforms." " [It] is not a foregone conclusion but, if Italy does not reform, an exit from EMU within 5 years is not totally unlikely. Indeed, like Argentina, Italy faces a growing competitiveness loss given an increasingly overvalued currency and the risk of falling exports and growing current account deficit. The growth slowdown will make the public deficit and debt worse and potentially unsustainable over time. And if a devaluation cannot be used to reduce real wages, the real exchange rate overvaluation will be undone via a slow and painful process of wage and price deflation."^[16]

2009

As of January 2009, he remained pessimistic about the U.S. and global economy. He said in September, 2008, "we have a subprime financial system, not a subprime mortgage market".^[17] "As the U.S. economy shrinks, the entire global economy will go into recession. In Europe, Canada, Japan, and the other advanced economies, it will be severe. Nor will emerging market economies—linked to the developed world by trade in goods, finance, and currency—escape real pain."^[18] He was quoted in South Africa's 2009 budget speech for his role in predicting the current financial crisis in the developed markets.

Roubini notes that the subprime issues are a global, and not just a U.S. problem. In an interview with author James Fallows in late spring of 2009, he stated, "People talk about the American subprime problem, but there were housing bubbles in the U.K., in Spain, in Ireland, in Iceland, in a large part of emerging Europe, like the Baltics all the way to Hungary and the Balkans. It was not just the U.S., and not just 'subprime.' It was excesses that led to the risk of a tipping point in many different economies."^[14]

His pessimism is focused on the short-run rather than the medium or long-run.^[1] In Foreign Policy (Jan/Feb 2009), he writes, "Last year’s worst-case scenarios came true. The global financial pandemic that I and others had warned about is now upon us. But we are still only in the early stages of this crisis. My predictions for the coming year, unfortunately, are even more dire: The bubbles, and there were many, have only begun to burst".^[18]

At a conference in Dubai in January, 2009, he said, the U.S. banking system was "effectively insolvent." He added that the "systemic banking crisis.... The problems of Citi, Bank of America and others suggest the system is bankrupt. In Europe, it’s the same thing."^[19] To deal with this problem, he recommends that the U.S. government "do triage between banks that are illiquid and undercapitalized but solvent, and those that are insolvent. The insolvent ones you have to shut down." He adds, "We're in a war economy. You need command-economy allocation of credit to the real economy. Not enough is being done," he felt at the time.^[20]

2010

In 2010, he again warned that despite an improved economy with rising stock markets, the crisis was not over and new bubbles were on the horizon:

"We are just at the next stage. This is where we move from a private to a public debt problem . . . We socialised part of the private losses by bailing out financial institutions and providing fiscal stimulus to avoid the great recession from turning into a depression. But rising public debt is never a free lunch, eventually you have to pay for it."^[21]

In late May 2010, markets around the world began dropping due partly to problems in Greece and the Eurozone. "Roubini believes Greece will prove to be just the first of a series of countries standing on the brink," writes the Telegraph.^[21] Roubini explains the new issues governments must deal with:

"We have to start to worry about the solvency of governments. What is happening today in Greece is the tip of the iceberg of rising sovereign debt problems in the eurozone, in the UK, in Japan and in the US. This... is going to be the next issue in the global financial crisis."^[21]

China

Roubini met officials in China during spring 2009, and points out that many Chinese commentators blame American "overborrowing and excess" for dragging them into a recession. However, he states that "even they realize that the very excess of American demand has created a market for Chinese exports." He adds that although Chinese leaders "would love to be less dependent on American customers and hate having so many of their nation’s foreign assets tied up in U.S. dollars," they’re now "more worried about keeping Chinese exporters in business. . . . I don’t think even the Chinese authorities have fully internalized the contradictions of their position."^[14]

2011

Roubini and political scientist Ian Bremmer have described the 21st century world as fragmenting economically and politically, where the "old models of understanding global dynamics are struggling" to keep up with rapid changes. In an article in Foreign Affairs magazine, they describe what they call a "G-Zero world," where the United States no longer has the resources to continue as the primary provider of global public goods. As a result, there is likely to be more conflict than cooperation between countries, creating a "zero sum game," a "game in which my win is your loss." They explain their rationale:

"Europe is fully occupied for the moment with saving the eurozone. Japan is likewise tied down with complex political and economic problems at home. None of these powers’ governments has the time, resources, or domestic political capital needed for a new bout of international heavy lifting. Meanwhile, there are no credible answers to transnational challenges without the direct involvement of emerging powers such as Brazil, China, and India. Yet these countries are far too focused on domestic development to welcome the burdens that come with new responsibilities abroad.

"We are now living in a G-Zero world, one in which no single country or bloc of countries has the political and economic leverage—or the will—to drive a truly international agenda. The result will be intensified conflict on the international stage over vitally important issues, such as international macroeconomic coordination, financial regulatory reform, trade policy, and climate change. This new order has far-reaching implications for the global economy, as companies around the world sit on enormous stockpiles of cash, waiting for the current era of political and economic uncertainty to pass. Many of them can expect an extended wait."^[22][23]

Writings

Roubini is the author of several books, including:

• Crisis Economics: A Crash Course in the Future of Finance
• Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies^[24]
• Political Cycles and the Macroeconomy^[25]
• New International Financial Architecture^[26]

Research

Roubini's research interests include:

• international macroeconomics and international finance;
• macroeconomics and fiscal policy;
• political economy;
• growth theory;
• European monetary issues.

Current appointments

• Research Fellow, National Bureau of Economic Research
• Research Fellow, Centre for Economic Policy Research, London, UK
• Member, Bretton Woods Committee
• Member, Council on Foreign Relations Roundtable on the International Economy
• Member, Academic Advisory Committee, Fiscal Affairs Department, International Monetary Fund

References

External links

• Nouriel Roubini official website
  • Global EconoMonitor
• Economic Doom blog
• Nouriel Roubini on Twitter
• Who is Roubini?
• Nouriel Roubini at Stern School of Business, New York University
• Profile at Leigh Bureau
• Column archive at Project Syndicate
• Video: Roubini's predictions for 2009 on YouTube