The world is on the verge of another major crisis. The probability is very high, over 60%. This is what Nouriel Roubini said in an interview with Bloomberg: “We’ve reached a stall speed in the economy, not just in the US, but in the euro zone and the UK. We see probably a 60 percent probability of recession next year, and, unfortunately, we’re running out of policy tools…..and sovereigns cannot bail out their own distressed banks because they are distressed themselves.”
According to Nouriel Roubini, today we can see another crisis being gradually initiated in the global economy.
Global economic situation: Most economies, both developed and developing, cannot withstand the pressure of numerous global-scale problems, thus drowning the entire global economy. At the same time those developing economies that have been considered lifesavers still cannot cure the global economy.
Roubini’s forecast: “I thought a few months ago that the perfect storm would be 2013. But now, the economic weakness in the US, euro zone and the UK is front loaded. So we’re going to double dip earlier. The climax of it could be 2013, or it could be already earlier. It depends on what policy tools are available.”
Saving the global economy: However, Roubini believes that it is still possible to save the day. But the steps should be taken as soon as possible. It is necessary to focus on how to restore the economy here and now. Otherwise there will be another Great Depression, but this time on global scale. The situation is getting worse day by day.
It should be noted that Nouriel Roubini has been respected around the world since 2007, when he predicted the previous global crisis (2008).
Tips for investors: what is China and Russia’s role in the global economy?
According to Mr. Roubini, China is about to have serious economic problems. Despite the fact that China’s economy came out of the previous crisis relatively unscratched, it is still vulnerable:
China’s production potential is excessive. It can grow into a bubble and burst. The country’s internal consumption doesn’t exceed 36% of the GDP. That is why the Chinese economy is greatly dependent on export. Conversely, in the US consumption is around 70% of the national GDP.
China’s economic growth and those considerable bank loans given to Chinese manufacturers led to overproduction in many industries.
According to the Russian Association of Traders and Investors under , the economic situation in Russia is difficult as well. Russia’s economic indicators are currently growing due to more expensive energy sources (oil and natural gas), not because the country’s economy is strong.
The oil and gas sector of Russia’s economy is probably the only “healthy patient” there. However it is very dependent on energy prices. The domestic market needs diversification, liberalization and the elimination of bureaucracy and corruption. Another problem of Russia’s economy is the outflow of foreign capital. Foreign investors don’t want to invest in Russian businesses under the corrupted system.
EURUSD: short-term prospects
According to ICM Brokers, it was the US mortgage crisis that provoked the latest global economic and financial crisis. The origin of the US crisis can be traced back to 2006 when Americans started failing to pay back mortgage loans for the first time.
Now numerous governments, including Russia, are talking about the necessity of another global reserve currency instead of the US Dollar. Consequently, Nouriel Roubini may well be right. By the way, not so long ago George Soros decided to retire and to hand his business over to his sons.
According to the Department of Masterforex-V trading system , EURUSD has come out of the long-term bullish sloping channel. However, it is too early to talk about a change of trend. The long-term uptrend will be reversed when the price breaks below the defensive MF pivot at 1.2885. If EURUSD resumes its long-term rally, it will encounter resistance around 1.4556 and 1.5680.
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Will there be another major crisis in the short run?
