Make Kitco Your Homepage

News Bites

Nouriel Roubini says global economy faces deadly recession

Neils Christensen

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - The man who pretty much called the cyclical low in gold is now warning investors that they could face a global depression in the next few years.

In a recent interview with Bloomberg, famed economist Nouriel Roubini, a professor at the New York University's Stern School of Business and chairman of Roubini Macro Associates LLC, said that he sees a very anemic recovery in the U.S. followed by a depression in 2021.

Some economists are optimistic that the U.S. economy could see a sharp "V" shaped recovery as the impact of the COVID1-19 pandemic diminishes. However, Roubini said that his base case is for an "L" shaped recovery.

"Unfortunately, I fear there are some major trends…what I call the 10 deadly Ds that are going lead us to a deadly depression sometime later in this decade. Only a matter of when," he said in the interview.

Some of Roubini's "deadly Ds" include debt, deficits, deglobalization, currency devaluation, and environmental disruption.

In the last two months, central banks and governments around the world have pumped massive amounts of capital into financial markets to support the global economy that has been decimated by the coronavirus.

Last week, Federal Reserve Chair Jerome Powell said that in the current emergency situation, debt doesn't matter. He also said that the central bank is ready to do whatever it takes to support the faltering U.S. economy.

While the emergency steps the Federal Reserve has taken, has been necessary, some economists have noted that Powell is setting dangerous precedent.

Roubini said that these monetary and fiscal policies will not only fail to stop the "slow-moving train wreck" but will exacerbate the debt and deficit issues.

Roubini's interview didn't touch on the gold market. Still, many market analysts have been bullish on gold as the global economy faces stagflationary risks - an environment of slow growth and high inflation.

Many commodity analysts are expecting gold prices to hit all-time highs by early next year.

In 2013 Roubini made headlines in the gold market after he forecasted that gold prices would drop to $1,000 an ounce by 2015. Gold prices bottomed in November of that year at $1,045.40 an ounce.

Roubini also predicted the 2008 financial crisis.

By Neils Christensen

For Kitco News

Contact nchristensen@kitco.com
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.