The entire world is discussing another gloomy forecast made by Nouriel Roubini, a respected professor from the University of New York, who predicted the latest global crisis. Most economists around the world share Roubini’s point of view, saying that the 2nd wave is highly probable. But Roubini even specifies the time of another crisis - mid 2013.
However, Nouriel Roubini is not a prophet. Some of his forecasts failed. Previously he expected the 2
nd
wave of the crisis to hit the world in 2009 and in 2010,
experts say. However, as opposed to George Soros and Warren Buffet, Nouriel Roubini is a scientist. He made a reasoned forecast..
A “perfect storm” of threats
According to Nouriel Roubini, there is a “perfect storm” of 4 threats, which may hit the global economy in 2013. The 4 threats are:
· an economic slowdown in China
· the damage done to Japan
· the current debt crisis in Europe
· the emerging crisis in the USA
According to the US-Canadian Association of Traders and Investors under , the main threat is that no government or central bank has learned a lesson from the 1st wave of the global crisis. The problems are not being solved. The governments keep postponing the solution and accumulating more problems. So, the 2nd wave may turn into a tsunami. They are trying to solve the problems by the same means that caused the crisis (private and public loans):
· The state support is 10-12% of the household income in the US
· The US budget deficit has already exceeded $1 trillion. The same gap is expected to be seen in 2012 and 2013.
· The net public debt of the USA, Japan and 17 members of the eurozone has already exceeded 90% of their cumulative GDP.
The experts of agree that the public and private debts keep growing. However there is significant resistance. The US Congress has refused to lift the debt ceiling for 3 times this year. The limit was exceeded in mid May. So now the USA hasn’t still defaulted on its debt only due to curtailing some of its stimulation programs. However, without lifting the debt ceiling the US will only stand till August 2nd.
The eurozone’s debt problem keeps affecting the global economic situation. Yet there are no signs of improvement. Moreover, the necessity of providing Greece with another multi-billion loan testifies to the depth of the current recession seen in the eurozone rather than to its economic recovery. The experts of assume that if Spain joins the debt-ridden Greece, Portugal and Ireland, which are on the verge of default, the very existence of the common currency will be threatened.
Nouriel Roubini warns about the forthcoming “revolt” in the market of the US T-bonds.
· Nobody believes any more that the US T-bonds are safe assets. In the near future they will start depreciating. In order to buy them back from investors the US will have to issue more dollars, which will make the US currency collapse.
· It is highly probable that the T-bond depreciation will be followed by a series of bankruptcies
· The US Dollar will be in short supply and will appreciate once again. The interbank lending market will be closed. The same thing happened in 2008 when the 1st wave of the global crisis hit the world after Lehman Brothers went broke.
· While searching for liquidity numerous banks and funds will be selling the futures of precious metals and other commodities, which will cause the “domino effect”.
This is what Roubini means by saying that the debt load has grown in comparison with 2008. The greater the debt load is the more rapid the collapse will be: the 2nd wave will be much stronger than the 1st one, notes.
Will production increase save the day?
Can any production increase help to avoid the crisis? Roubini say it cannot.
The experts of Masterofrex-V Academy note that since the beginning of 2011 all the leading analytic services around the world have revised their forecasts for the development of the national and global economies. For example, according to the World Bank’s latest forecast:
· The pace of the global economic growth is slowing down. This year the global economy is expected to grow only by 3.2% (versus3.8% in 2010).
· The economies of the developed countries will only grow by 2.2% (versus 2.7% in 2010)
· The US economy will show a 2.6% increase.
Nouriel Roubini assumes that in the second part of 2011 the global economy will start falling into the abyss of a new global crisis. All the mentioned problems will inevitably lead to stagnation, which then will grow into another crisis. The crisis is expected to break out until mid 2013.
Numerous experts including some of the experts of consider Roubini’s forecast too optimistic and say the 2nd wave of the global crisis will spread over the world much earlier.
What are the near-term perspectives of the US Dollar? The US Dollar keeps being pressed by the basket of major currencies. According to the Department of studying Masterforex-V trading system , the USD index has recently come out the sloping channel, forming a downswing along the major long-term downtrend as well as the “moment of truth” pattern (Daily) against it.
A bearish FZR of Daily will prompt the desire of the index to update May’s low. In this case the closest support levels will be found at 73,66 and 72,86. Once the bearish scenario is canceled the “Hound of the Baskervilles” pattern by Elder/MF (Daily 2) will keep retracing against the major trend. 76,54 will become the closest resistance level.
Market Leader and offer you to participate in a survey. Please, visit the Academy’s forum and answer the following question:
Will the 2nd wave of the global crisis eventually break out?
· Yes, it will. Roubini is right.
· No, it won’t. The world won’t survive another major crisis.
