Best of the Week
Most Popular
1.Gold And Silver Voodoo Analysis Price Forecasts - Austin_Galt
2.UK Saved From I.S. Threat But Scottish Independence Nightmare is Not Over! - Nadeem_Walayat
3.Silver Price At or Very Close to an Important Low - Clive_Maund
4.Gold And Silver - PetroDollar On Its Deathbed? PMs About To Rally? No - Michael_Noonan
5.Gold and Silver Bear Phase III Dead Ahead - Rambus_Chartology
6.Stock Market Major Selloff Looms - Zeal_LLC
7.Inflate or Die! When Leverage Fails and Market Hope Turns to Fear - Ty_Andros
8.Gold Price Very Close to an Important Low - Clive_Maund
9.Market Forecasts for Stocks, Gold, Silver, Commodities, Financials and Currencies - EWI
10.U.S. Aggression - Will Russia and China Hold Their Fire? - Paul_Craig_Roberts
Last 5 days
Stock Market Wil-e-Coyote Moment May Have Arrived - 1st Oct 14
Europe Teetering the Ddge of a "Japan-style" Deflation - 30th Sept 14
Economists Economic Atonement - 30th Sept 14
Everything You Need to Know About the Stock Market S&P Index Until Christmas - 30th Sept 14
Singapore Becoming Global Gold Hub - Launches Kilo Bar Contract And Gold ATMs - 30th Sept 14
Germany Fights on Two Fronts to Preserve the Eurozone - 30th Sept 14
Turn the Tables on the Gold and Silver Market Manipulators - 30th Sept 14
U.S. 2014 Election Business as Usual - 30th Sept 14
Gold - Time to Buy the Dip? - 30th Sept 14
Urging Investors to Stay Liquid for the Coming Gold Stocks Boom - 30th Sept 14
The Japanese Deflation Myth and the Yen’s Slump - 29th Sept 14
Epic Investor Optimism that Can Be Reversed Only by a Huge Stocks Bear Market - 29th Sept 14
Russia’s Gokhran Buying Gold Bullion In 2014 and Will Buy Palladium In 2015 - 29th Sept 14
The End of Monetary Policy - 29th Sept 14
Here's What Rising Interest Rates Really Do to Your Shares - 29th Sept 14
Is a Credible Stock Market Top Forming? - 29th Sept 14
Silver Price At or Very Close to an Important Low - 29th Sept 14
Gold Price Very Close to an Important Low - 29th Sept 14
Nihilism And The Unknown Future - 29th Sept 14
Stock Market S&P, NAS Change In Trend? None Apparent, But A Caveat - 29th Sept 14
UK Saved From I.S. Threat But Scottish Independence Nightmare is Not Over! - 29th Sept 14
U.S. Aggression - Will Russia and China Hold Their Fire? - 28th Sept 14
Currency Wars and the Death of the Euro - Audio - 28th Sept 14
Obscure Maritime Law Practically “Guarantees” Profits for These Energy Companies - 28th Sept 14
Stock Market Primary IV Underway? - 27th Sept 14
Darwin And The Climate Apocalypse - 27th Sept 14
The Global Middle Class and Copper Consumption, A Stop Spike Event - 27th Sept 14
Can Money Save The Climate? - 27th Sept 14
Gold And Silver - PetroDollar On Its Deathbed? PMs About To Rally? No - 27th Sept 14
Debt and Inflation Consquences of American Fear - 27th Sept 14
U.S. and Global Confidence are in Divergence - So Are Stock Markets - 27th Sept 14
Are U.S. Cars About to Crash? - 27th Sept 14
Why the U.S. Created and Armed ISIS From Libya to Syria - 27th Sept 14
Stock Market vs the Developing Bear Market for Liberal Democracy? - 26th Sept 14
Stock Market Major Selloff Looms - 26th Sept 14
How My Charts Uncovered Two Big Stocks That Are Soaring Like Small Caps - 26th Sept 14
What Cycles Reveal About Stock Market Crash - 26th Sept 14
Gold Not A Safe Haven On Terrorism, Middle East Bombing, Russia ... Yet - 26th Sept 14
Valuing Gold and Turkey Farming - 26th Sept 14
Gold $1200 Underpinned by Physical Demand - 26th Sept 14
Inflate or Die! When Leverage Fails and Market Hope Turns to Fear - 26th Sept 14
Market Forecasts for Stocks, Gold, Silver, Commodities, Financials and Currencies - 26th Sept 14
Gold and Silver Bear Phase III Dead Ahead - 26th Sept 14
The Home Depot Breach Boils Our Blood – and It Should - 26th Sept 14
Why the Pundits are Wrong About Crude Oil Prices - 26th Sept 14
Where’s the Economic Growth? - 26th Sept 14
Stock Market Future Bull - 25th Sept 14
The Specter of Global Debt Default is Once Again Rearing its Head - 25th Sept 14
All Major Market Analysis and Forecasts Investor Open House has Started! - 25th Sept 14
Federal Reserve Policies Cause Booms and Busts - 25th Sept 14
Currency Wars Deepen - Russia, Kazakhstan Buy Very Large 30 Tons Of Gold In August - 25th Sept 14
Strong U.S. Dollar Pressures Gold - 25th Sept 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Most Exciting Event in the History of Technical Analysis

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