Roubini sees recession lasting or even double dipping.

Nouriel Roubini a professor at NYU wrote a piece outlining eight points as to why he thinks the projected recovery will take much longer than most anticipate. Newsweek already announced the recession is over, however Nouriel disagrees and in fact points to a developing possibility of a double dip recession and believe me, this is no ice cream treat. “Yeah uhm, I’ll take a double dip recession with some unemployment sprinkles and debt chunks”. Not so much, instead we are looking at a recovery of some kind followed by yet another recession. Fun fact time! During FDR and the expansion of government, America experienced it’s first double dip recession or specifically a recession within a depression. FDR somehow managed to convinced the zombie masses that his predecessor somehow was to blame, but this tactic will not fly in the age of information. Not to dwell on the matter further, but it was FDR’s policies that caused the double drip recession, taxation, regulation, price control and the general malaise of government intervention.

So why should you trust Nouriel Roubini, it’s not like you ever heard of him, what does he know? I probably would not pay attention to him either, except he has an annoying tendency of being right and in fact predicted the 2008 fiasco. Perhaps he is just a perma-cynic, after all, his nickname is Doctor Doom and that’s almost as scary “Mr. Rogers”. Either way, many of us are concerned about the economy and what to possibly expect in the near future, should we buy a house, a car, invest, etc? Consider his points, for they are accurately stated and hard to dispute.

“There are also now two reasons why there is a rising risk of a double-dip W-shaped recession. For a start, there are risks associated with exit strategies from the massive monetary and fiscal easing: policymakers are damned if they do and damned if they don’t. If they take large fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity soon, they would undermine recovery and tip the economy back into stag-deflation (recession and deflation).

But if they maintain large budget deficits, bond market vigilantes will punish policymakers. Then, inflationary expectations will increase, long-term government bond yields would rise and borrowing rates will go up sharply, leading to stagflation.”

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