Best of the Week
Most Popular
1.U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - Nadeem_Walayat
2.The Coming U.S. Economic Collapse Will Trigger a Revolution - Harry_Dent
3. Stock Market Crash a Historical Pattern? - Wim_Grommen
4.Global Panic - U.S. Federal Government Stockpiling Ammo – Here’s What We’re Going to Do - Shah Gilani
5.AI, Robotics, and the Future of Jobs - Aaron Smith
6.This is Your Economic Recovery With and Without Drugs - James_Quinn
7.Gold and Silver Price Getting Set To Explode Higher - Austin_Galt
8.The Something for Nothing Society - Lifecycle of Bureaucracy - Ty_Andros
9.Another Interesting Stock Market Juncture - Tony_Caldaro
10.Inflation vs the Deflationary Straw Man - Gary_Tanashian
Last 5 days
Stock Market Panic Decline Begins - 27th Aug 14
The Monopoly of the Government Education Cartel - 27th Aug 14
How to Invest in Silver Today for Double-Digit Gains - 27th Aug 14
The Big Solar Energy Breakthrough We've Been Waiting For - 27th Aug 14
U.S. Empire’s Bumpy Ride - 27th Aug 14
Gold Market and the Interest Rate Trap - 27th Aug 14
Stock Market Staring Into the Great Abyss - 27th Aug 14
A Look at the Coming 30-year Inflation Cycle - 27th Aug 14
Forex Trading - Will USD/CHF Rally Above 0.9200? - 27th Aug 14
Europe’s Depressing Economy Dog Days of Summer - 27th Aug 14
How The Coming Silver Price Bubble Will Develop - 26th Aug 14
A Nation of Shopkeepers - Supply-Side (Voodoo) Economics? - 26th Aug 14
Stock Market Bear Tracks Abound In Wall Street - 26th Aug 14
65,000 U.S. Marines Hold up a Mirror to the Economy - 26th Aug 14
Bitcoin Market Provides Clues for Investors - 26th Aug 14
The Key to Trading Success - 26th Aug 14
Will The US Succeed in Breaking Russia to Maintain Dollar Hegemony?... - 26th Aug 14
Even Mainstream Academia Worried about Massive Bubbles in Markets - 26th Aug 14
Iraq and Syria Follow Lebanon's Precedent - 26th Aug 14
Colonization by Bankruptcy: The High-stakes Chess Match for Argentina - 26th Aug 14
Dow Stock Index On The Cusp - 26th Aug 14
Prohibition Laws and Agency Regulations - 26th Aug 14
Will Canadian Regulators be Able to Avoid Final Fatal TSX Venture Exchange (TSX-V) Crash? - 25th Aug 14
HUI Gold Mining Stocks Elliott Wave Projection - 25th Aug 14
Stock Market Uncertainty Resolved With New High - 25th Aug 14
Go Forth Multiply And Replenish The Earth - 25th Aug 14
Dollar Dumping: When Actions Speak Loudest - 25th Aug 14
A Plethora of Currency, Stocks and Precious Metals Chartology - 25th Aug 14
Why Isn’t Fed Monetary Pumping Helping the U.S. Economy? - 25th Aug 14
Myths About Money and Inflation - 25th Aug 14
The Fed Will Raise U.S. Interest Rates in March 2015 - 25th Aug 14
Gold Price Manipulation Still Alive - 25th Aug 14
The Ebola Outbreak: U.S. Sponsored Bioterror? - 24th Aug 14
Instigating War in Europe - Understanding Ukraine in 15 Minutes - 24th Aug 14
LNG Catalysts About to Hand You the investment Opportunity of the Decade - 24th Aug 14
Another Interesting Stock Market Juncture - 24th Aug 14
The West Set Up the ISIS Endgame - 24th Aug 14
Gold And Silver Low Prices Are NOT The Reason To Own Precious Metals - 24th Aug 14
U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - 23rd Aug 14
Inflation vs the Deflationary Straw Man - 23rd Aug 14
U.S. Interest Rate Rise to Occur Mid-2015 According to Fed's Williams - 23rd Aug 14
Bitcoin Price Continuation of a Move up - 23rd Aug 14
Gold and Crude Oil Price on the Verge of Something Big - Hero's Rarely Win - 23rd Aug 14
Oxaloacetate Feeds and GROWS Brain Cells - Alzheimers Cure? - 23rd Aug 14
Gold Rising Interest Rate Fallacy - 22nd Aug 14
Jackson Hole: Myth of the All Powerful Central Banker Continues - 22nd Aug 14
Partying On In The Terror State - Thank God for Nuclear Weapons - 22nd Aug 14
The Something for Nothing Society - Lifecycle of Bureaucracy - 22nd Aug 14
Hitting The ISIS Panic Button In The Middle East - 22nd Aug 14
US Stock Indices 10-Year Consolidation Patterns ... Upside Breakouts? - 22nd Aug 14
Gold and Silver Price Getting Set To Explode Higher - 22nd Aug 14
Deflation's Final Curtain Call - Part II - 22nd Aug 14 - Clif_Droke
Gold Big Picture: Most Important - 22nd Aug 14
How the “Uncertainty Factor” Drives Crude Oil Prices - 22nd Aug 14
Inflation, Interest Rates, and Why You Should Own Gold - 22nd Aug 14
U.S. Interest Rates Can Rise States Fed President - 22nd Aug 14
Why Emotional Discipline is Key to Trading Success - 21st Aug 14
Getting the Most Value from Your “Geriatric Cruiser” - 21st Aug 14
Mafia Boss Claims Stocks A Bubble, Buy Physical Gold and Silver - 21st Aug 14
Outrage! On The Beheading of Our Media Brother James Foley - 21st Aug 14
Stock Market Crash a Historical Pattern? - 21st Aug 14
The Black Box Economy - 21st Aug 14
The Bond Market is taking Advantage of Janet Yellen`s Dovishness - 21st Aug 14
Meet Your Investment Manager - 21st Aug 14
Gold and Silver Trading Alert as U.S. Dollar Soars to New Highs - 21st Aug 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

Nouriel Roubini on U.S. Economy, Bond Vigilantes, and Yuen Becoming a Reserve Currency

Stock-Markets / Financial Markets 2011 May 03, 2011 - 04:37 AM GMT

By: Bloomberg

Stock-Markets

Best Financial Markets Analysis ArticleToday on Bloomberg Television, NYU professor and economist Nouriel Roubini talked about the euro and China's currency during a panel with Bloomberg TV's Tom Keene at the Milken Institute Global Conference in Los Angeles.


On the U.S. political economic projection:

"We have to address own problems. If you're looking at advanced economies, there's a series of problems that are going to remain with us, leaving aside geopolitical challenges we're facing. We're coming out of the balance sheets of a recession. We have excesses of debt and leverage in the housing sector, in the financial system and in the government sector, both state and local and federal level…That's a problem in the U.S., in the Eurozone, in Japan, in the most advanced economies. There is a problem of sovereign risk. The bond market vigilantes have already woken up in the periphery of the Eurozone. They have not woken up yet in the U.S., or U.K and Japan."

"[The bond vigilantes have not woken up] for a number of reasons… In the U.S., U.K. and Japan, we can, if we want to, monetize our fiscal deficit and we have done so to some level. In the case of Greece, you either raise taxes or cut spending…To monetize it is not an option because the ECB is institutionally having a single band-aid price and the ECB is more hawkish than the Fed. If Greece cannot resolve its debt problem through traditional taxes, then it will have to do an orderly debt restructuring and that will be, in my view, at this point unavoidable."

On the euro number where instability really comes into play:

"I would say that Germany, being uber-competitive, can live with the euro at $1.50 but the euro at $1.40 was already painful for the periphery of the Eurozone, where you have a bad period of wages growing more than productivity, labor costs rising…The euro should be much weaker than it is right now, to try to restore some growth in the peripheral Eurozone."

On whether the euro problems are due to the U.S. or the ECB:

"It is a combination. On the one side, the ECB is going to keep on tightening because they care about core inflation and not about growth, because the core is doing well while the Fed is going to stay on hold.”

"Financials are going to push the euro higher, but once it reaches the threshold of pain, it will cause more damage on the periphery and growth is going to disappear, it's not much there, the sovereign problem will be exacerbated, banking problems, competitiveness, so the euro, like in the spring of last year, we can go to $1.50, but once the periphery is damaged it can fall again."

"On the other side, there's also a fundamental weakness of the dollar because of the fiscal deficit and the Fed being on hold. But the way I described the FX market for last year, it's been like a beauty contest, not an issue of who is the prettiest or most handsome, but who's the least ugly.

"In the spring of last year, the dollar was less ugly because we had the euro crisis, the Greek crisis. Then by the summer, we had the risk of a double-dip recession, QE2 and then the euro became less ugly…So today the euro looks less ugly. It's really a beauty contest of who is the least ugly and that swings over time depending on growth concerns, sovereign debt, interest rate policies."

On which nation's currency will lead in this exchange rate game:

"Certainly not China. Because in this fundamental exchange rate game, the currencies that should be appreciating are those that are undervalued…while those that should be depreciating are the U.S., U.K. and other countries that have a bubble that went bust and now need net export growth given the domestic growth is going to be anemic…”

"The trouble is that China is resisting its currency from not depreciating. China is shadowing the U.S. dollar and then every other emerging market in the world, not just in Asia but those in Latin America, they say if China resists appreciating its currency, they don’t want to lose market share to China and they don't want a flood of cheap Chinese goods destroying their import competing sector."

On the economy in China:

"In China today, fixed investment is 50% of GDP and consumption is only 35% of GDP and has been falling...So the model of global China, net export net growth, more fixed investment, infrastructure, real estate, manufacturing, is not sustainable because no country can be so productive…Historically, every case of an over-investment has ended up in a hard landing. The Soviet Union. Latin America in the 70's, the U.S. in the 90's. There has never been a case of a return from an over-investment boom having a soft landing.

“I don't expect a hard landing to occur in China until after 2013 because next year, there'll be a change in political leadership. And that's going to be delicate. They're going to do everything to maintain growth."

On the Chinese renminbi:

"One year ago, I wrote an op-ed arguing over the next 20 years, the renminbi could become a major reserve currency…I said the next 20 years, but in the last year China has done so much to internationalize the role of renminbi as a unit of account, as a method of payment..So capital mobility is going to occur slowly, they're going to do it gradually, I think it's going to happen after 2012."

"But for example, now they are creating a renminbi-dominated market in Hong Kong to become significant in importance. They are doing it by pushing it offshore rather than inshore…But the Chinese have actually accelerated the pace at which they're making the renminbi a more international currency, much faster than I ever expected."

bloomberg.com

Copyright © 2011 Bloomberg - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014