Tuesday, June 14, 2011

The Perfect Storm is Brewing for Global Economic Meltdown... or is it Just a Lot of Hot Air?

I stumbled on this article from the Daily Ticker at Yahoo! the other day in which the hosts discuss Nouriel Roubini's latest case for global meltdown.

Here are the NYU Professor's latest four horsemen of the economic apocalypse:

  • Reckless spending by the U.S. government (state and federal)
  • Potential Chinese slowdown
  • The Euro-debt bomb (A.K.A.: Greece)
  • Continued stagnation in Japan.

Roubini apparently gives the odds in this way:

  • 33% Recession
  • 33% "anemic growth"
  • 33% "accelerated growth"

I'm personally a little confused on his basis for such a large chance of accelerated growth. I'm no economist, but I'll play one here... ;-)

Every economic indicator is currently pointing toward either recession, or stagflation. The so-called government stimulus is running out, and taking the illusion of economic growth with it. States are out of money and finally beginning to cut costs. The Federal government is now in its second year without any budget, and its 3rd straight year of $1.5 TRILLION deficits.

Greece is America if America fails to scale back the size of government and the entitlement society - soon. The U.S. entitlement society has not reached the epidemic proportion it has in Greece, and so austerity measures can still work, but if we wait too long we will be in the same position Greece is in now - dead man walking.

Austerity measures in Greece are shrinking the GDP because too much of their GDP is built on unsustainable public sector employment. In short, no one is creating any wealth! They simply take money from the private sector to pay for public sector wages and benefits. That house of cards needs top fall before anything can be fixed. Instead, the world gets lies.

Here's a video of the DailyTicker hosts discussing this:


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