ECB Should Slash Interest Rates to Zero

The European Central Bank should reduce rates to zero, and make big purchases of government bonds. - in FT.com

Manic Markets

Manic Markets: one second is "Fed is not doing enough" & markets sharply down; next sec is "the Fed will rescue us" & markets sharply up - in NR`s Official Twitter

Economic Policy: We Have Run Out Of Rabbits To Pull Out Of Hats

Until last year, policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery. Zero policy rates, QE1, QE2, credit easing, fiscal stimulus, ring-fencing, liquidity provision to the tune of trillions of dollars and bailing out banks and financial institutions - all have been tried. But now we have run out of rabbits to pull out of hats. - in FT.com

Treasuries Moved Up After The Downgrade

In Friday Bloomberg interview I argued that Treasury yields would go DOWN not up following the S&P downgrade. Case closed.

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QE3 Won't Make A Difference

"QE3 won't make a difference." - in Bloomberg TV

S&P Downgraded The Fed, Should Downgrade The ECB To Junk

Since S&P downgraded the Fed that is now holding AA+ Treasuries it should downgrade the ECB to junk as it holds lotsa BBB to CCC PIIGS debt. - in Nouriel`s Official Twitter

Definition Of Crisis

Definition of "crisis": when officials need to huddle up on a weekend before Asia opening to take decisions and do statements as turmoil rages. - in NR`s Official Twitter

Until Now, We Have Back-Stopped The States Through The Federal Budget To Make Sure That They Don’t Blow Up

“Until now, we have back-stopped the states through the federal budget – transfer payments of a variety of sorts to make sure that they don’t blow up. At this point, the political willingness to do more of it is limited.” - in Forbes

Bloomberg Video: U.S. May Face Recession

Latest Bloomberg video interview - Watch here

Aug. 5 (Bloomberg) -- Nouriel Roubini, a New York University professor and the economist who predicted the global financial crisis, talks about the possibility of a U.S. recession. Roubini, speaking from Grand Lake Stream, Maine, with Michael McKee and Betty Liu on Bloomberg Television's "In the Loop," also discusses quantitative easing by the Federal Reserve and the July jobs report released today. (Source: Bloomberg)

QE1, QE2 And QE3

QE1 was mostly agencies — Fannie and Freddie, QE2 was treasuries mostly. QE3 could be state and local debt.” - in Forbes Blog

Lousy Job Report

Lousy job report: payrolls gotta rise by >150k to prevent unemp rate from rising: it fell to 9.1% only because 200K folks left labor force - in NR`s Official Twitter

There Is 70% Chance Of Italy Seeking Aid

"According to Nouriel Roubini, there is 70% chance of Italy seeking aid. (La Repubblica)" - in Proactive Investors UK

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QE3 Started In Japan & Switzerland

QE3 started in Japan & Switzerland via fx action &/or monetary easing. Fed will eventually get to QE3 but it will be too little too late. - in NR`s Official Twitter

Related: iShares MSCI Japan Index (ETF) (NYSE:EWJ), iShares MSCI Switzerland Index Fund(ETF) (NYSE:EWL)

The ECB Should Be Cutting Rates

The ECB not should not just hold rates; it should lower them to save Italy, Spain and stop the deepening recession in the periphery of the Eurozone. RGE's long-standing view that Spain and Italy had a high probability of losing market access is on the verge of materializing. - in NR`s Official Twitter Account

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Bad Economic Data, Eurozone Crisis. No Wonder Markets Are Free Falling.

Lousy GDP, depressed housing, plunging ISM, falling consumption, job losses, fiscal drag, Eurozone crisis. No wonder now markets are free falling. - in Nouriel`s Twitter

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G3 Economies Are Running Out Of Policy Bullets

G3 economies are running out of policy bullets: fiscal drag, inability to bailout banks by distressed sovereigns, limited effects of more QE.

Double-Dip Risk At 30 Percent

US economy close to stall speed and pig-headed front-loaded fiscal austerity making growth even worse and raising double-dip risk to 30 percent.

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Over-Investment In China

China train crash is signal of the excesses of over-investment: 10 thousand miles of high speed trains planned by an insolvent Railway Ministry - in Nouriel`s Twitter

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We Have Dual Speed Growth In Australia

Dual speed growth in Australia where resource sectors & regions are booming while retail/housing is weak. - In NR`s Twitter

Related: iShares MSCI Australia Index Fund (ETF) (EWA)

This Isn`t A Soft Patch

Stall speed in the economy: Q2 growth down to 1.3 percent and Q1 growth revised to 0.4 percent. And Q3 starting on weak note. This isn't a soft patch. - in Nouriel`s Twitter

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The Bond Market Beauty Contest

Bond market is a beauty contest about the least ugly:CDS spreads surging in Italy/Spain while debt ceiling saga isn't hurting US Treasuries. - in Nouriel`s Twitter

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Republicans Pretend To Be Born-Again Debt Virgins When They Fed The Beast

Reagan raised the debt ceiling 18 times, Bush 7 times by 4 trillion dollars. Now Republicans pretend to be born-again debt virgins when they fed the beast. - in Nouriel`s Twitter

I See The Chances That Greece Or Portugal Will Leave The Euro Zone At 30 Percent

In a few years the current rescue plan for Portugal will break down. The same holds for Ireland.

Euro-zone politicians may muddle through for another five years, but ultimately they will face very touch decisions. I see the chances that Greece or Portugal will leave the euro zone at 30 percent. - in Die Zeit, german newspaper

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Asian Financial Centers

Shanghai is still a long way in rivaling Hong Kong and Singapore as major financial center. - in Nouriel`s Twitter

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The Problem Of Sovereign Risk Will Be A Serious One For Many Advanced Economies

The recovery has been so weak because this was not a traditional recession, but was a recession caused by a financial crisis brought on by too much debt and leverage first in the private sector and now in the public sector.

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The problem of sovereign risk will be a serious one for many advanced economies for many years to come. - in MarketWatch.com

I Don't Think The U.S. Will Default

There are about eight days until the deadline. My baseline scenario is still an agreement will be reached. I don't think the U.S. will default. - in a Shanghai Conference

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Raise The Ceiling!

Almost no democracy has a debt ceiling. This US farce is nonsense. A decade of bipartisan deficits and tax cuts led us here. Raise the ceiling! - in Nouriel`s Twitter

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Any Deficit Reduction Requires Tax Hikes

Federal taxes were 20 percent of GDP at time of a balanced budget. Now down to 14 percent the lowest in 60 years. So any deficit reduction requires tax hikes. - in Nouriel`s Twitter

China’s Economy Is Overheating Now But Over Time Its Current Overinvestment Will Prove Deflationary Both Domestically And Globally

I recently took two trips to China just as the government launched its 12th Five-Year Plan to rebalance the country’s long-term growth model. My visits deepened my view that there is a potentially destabilizing contradiction between China’s short- and medium-term economic performance.

China’s economy is overheating now, but, over time, its current overinvestment will prove deflationary both domestically and globally. Once increasing fixed investment becomes impossible – most likely after 2013 – China is poised for a sharp slowdown. Instead of focusing on securing a soft landing today, Chinese policymakers should be worrying about the brick wall that economic growth may hit in the second half of the quinquennium. - in Project Syndicate

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The Biggest Challenges Advanced Economies Will Be Facing

"So the problems of sovereign risk, of reducing budget deficits and of stabilizing public debt are not just challenges for the eurozone periphery; they will be the biggest challenges advanced economies will be facing." - in MSNBC.com

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The Housing Market

The housing "spring season" ended into a worsening depression: existing home sales collapsing, cancellations surging, prices falling faster. - in Nouriel`s Twitter

Related: Lennar (LEN), KB Home (KBH), Toll Brothers (TOL), DR Horton (DHI)

The Eurozone Needs Policies To Restart Economic To Restart Economic Growth On Its Periphery.

"Finally, the eurozone needs policies to restart economic growth on its periphery. Without growth, any austerity and reform will deliver only social unrest and the constant threat of a political backlash, without restoring debt sustainability. To revive growth, the ECB needs to stop raising interest rates and reverse course. The eurozone should also pursue a policy – partially via looser monetary policy – that weakens the value of the euro significantly and restores the periphery’s competitiveness. And Germany should delay its austerity plan, as the last thing that the eurozone needs is a massive fiscal drag." - in Project Syndicate

The Eurozone Crisis Is Reaching Its Climax

The eurozone crisis is reaching its climax. Greece is insolvent. Portugal and Ireland have recently seen their bonds downgraded to junk status. Spain could still lose market access as political uncertainty adds to its fiscal and financial woes. Financial pressure on Italy is now mounting. - in The Eurozone's last stand

Greece: A Maturity Extension Would Still Provide Massive Debt Relief

Even if the face value of the Greek debt were not reduced, a maturity extension would still provide massive debt relief - on a present-value basis - to Greece as a euro of debt owed 30 years from now is worth much less today than the same euro owed a year from now. Moreover, a maturity extension resolves rollover risk for the coming decades. - in "The Eurozone's last stand"

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The advantage of a par bond is that Greece's creditors - banks, insurance companies, and pension funds - would be able and allowed to continue valuing their Greek bonds at 100 cents on the euro, thereby avoiding massive losses on their balance sheets. That, in turn, would sharply contain the risk of financial contagion.

Roubini Says Italy Needs a New Government, Repubblica Reports

Roubini Says Italy Needs a New Government, Repubblica Reports: LINK

Greece: There Is No Likely Scenario In Which Public Debt Sustainability Can Be Restored Without A Restructuring

Even if Greece were to fully implement the draconian 10 percent of GDP fiscal adjustment program imposed by the IMF and the European Union, there is no likely scenario in which public debt sustainability could be restored without a restructuring. - in Roubini.com

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CNBC Video Interview: July

Topics: Nouriel Roubini, Roubini Global Economics chairman & co-founder, explains why there's a need for more fiscal stimulus, and the "perfect storm" of threats that could slam the economy by 2013.

I See Every Economy In The World Trying To Push Their Problems To The Future

I see every economy in the world trying to push their problems to the future. We start with private debt, public debt, supra-national debt—we're kicking the can down the road and eventually this is going to come to a head in 2013. - in CNBC

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