Topic: Roubini Warns about the Incoming Stagflation (Read 272 times)

Green Energy is quite popular due to its benefits and this is why it's being used as a political tool.

Hopefully not but we will never know unless it happens

I believe that the reason for the lockdown policy is to make sure that the health-care systems could handle the current situation with the health policy. All of the things that you listed should be done for sure and currently being done in some places. I'm not sure about incentivizing businesses though unless it's an essential type of business or something.

That's the problem, there is still the "lack" of money that's why there's an increase in money supply to catch up to that "lack" of funds thing. I doubt they would stop printing or something.

It's always going to be the right time when it's for the environment. It's definitely good to rely on renewable energy resources instead of traditional energy sources that are depleting.

Well the thing is, if there is stagflation but no crashes, that is not really as bad as people make it out to be. I am not saying it is good or it would be helpful, obviously it is horrible and it is stagflation in the end, but I rather have that than have increasing market for few years and a crash right afterwards over and over again. Look at the markets in the last 15 years, we had amazing profits, a big crash, another slow return, a great profit afterwards, another crash now. You think this is better?

I do not think that we need markets to recover very quickly and get better and better and suddenly crash, that is not helpful at all and causes a lot of loss for not only people but the entire economy. Obviously better version would be getting better and not dropping down anymore but that rarely ever happens.

The tick-tocks effect of a pandemic causes disruption to the global supply chain which results in a scarcity of raw materials, production aids, capital goods, or components of production needed by the state. The weakening condition of the Chinese and US economies also means reducing demand for raw materials, raw materials, or components for manufactured finished goods. If the duration of the pandemic is short, the buffer stock can still sustain production. If the pandemic lasts longer, there is the potential for production to be interrupted or even stopped. Supply is disrupted, production declines will encourage price increases.

The phenomenon of reopening the economy even though the pandemic curve is still rising is one of the government's efforts to boost demand and preventive measures to weaken the economy. Government and central bank intervention through fiscal and monetary policies is needed, it's just that due to the weakening of the global economy in 2019, alternative maneuvers from the government and central banks are limited due to limited blood. During 2019 many countries have provided tax incentives and reduced interest rates, so the question arises how low can you go, and what else can be done by the government and the central bank.

Generating the enthusiasm of consumption amid the potential reduction in production can also impact inflation. So the government needs to encourage alternative raw materials for production, component products, or independent capital goods so that they are not affected by the disruption of the global supply chain.

But judging from the movement of China and the acceleration of its manufacturing industry which had stopped and many countries are opening up economies in the midst of a pandemic, the world will be able to avoid stagflation.

https://www.visualcapitalist.com/global-central-banks-policy-response-covid-19/

There might be some "negative supply shocks" due to new lockdowns,but I don't believe that "deglobalization" will happen.Some borders are closed temporarily.That doesn't mean that the global economy will move from globalization to formation of a  bunch of self-sustaining regional unions(like the EU).
Roubini always wants to play the "prophet of the Apocalypse" role,so he could stay relevant and popular.
Stagflation means inflation and unemployment rates going up at the same time.I think that the economy cycle is going to look more like a typical recession(unemployment+deflation) rather than stagflation.

Green energy is known to be political tools from the left.
https://www.politico.com/news/2020/06/08/democrats-clean-energy-recovery-packages-306981

I'm not sure if I agree, but for the sake of this topic, yep you can say that.

Certainly not about spending/investment to improve something that is not urgent. Like the icebergs won't melt anytime soon (hopefully ).

I believe the lockdown policy has failed; therefore, the policy should be about pushing everyone to get back to work asap to solve the output problem. When we imagine going out to work is just like going to the battlefield, then:
- increase hospital bed (temporary);
- more place for washing hands;
- more schedule for trains and buses since the capacity has been cut in half;
- incentivizing the business to open.

Next, they should be dealing with the inflation problem. The easiest way is to reduce the money supply to pull the economy into recession. But it should only be done if the inflation is intolerable.

It can be done anytime, as long as there are economic justifications behind it. Yes, it happened everywhere in the world (including in my country) because green energy in the right area will be cheaper or more less the same as fossil energy. That's why Bitcoin miners concentrated in rich hydro energy areas in China.

If the current governments have budget problems, they will approve projects that will ease their financial burden, not projects that will make them more miserable.

It's fair to criticize what the scholar said but it's the ideal route for the economy. How is it political? Isn't it just common sense with what could happen? You agree that stagflation is imminent but what do you think should be done in replacement to that? I'm no expert but I can't suggest anything because it's not in my domain though.

When should you think it should be done? When there's no pandemic anymore? Even before the pandemic, there were a lot of opportunities to convert or "add" the green energy system for use, but did it happen? I guess some but like what I said in the previous post, it's better to focus on the healthcare system first.

Yea, but we shouldn't just take what the scholar said without fair criticism. IMO it's more like a political statement than about economics. When the stagflation is imminent, the solution presented here is too far ahead of the problem and too general. It seems like "everything" can be solved with green energy, better infrastructure, education, and the healthcare system.

Green energy, especially, switching now will only add costs with no tangible benefit in the economic sense.

It's in the article though.


The possible solution and what the U.S. could've done. It's said there that there are other countries that have done better during the pandemic in which focusing on those three parts of the system. Since it's not the case, high unemployment and stagnant demand in the economy has happened, hence stagflation.

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I don't understand what these have to do with stagflation when you have output problems and inflation problems at the same time.

Agree, making a prediction is a common thing, it's a 50:50 chance. Right or wrong doesn't mean anything except he got it 10/10.

I found economists often make conservative or should I say rather pessimistic predictions.
Stagflation is a serious thing if we look at history.

Well he's not predicting doom exactly, just stagnant growth and inflation. It's certainly not outside the realm of possibility. If money printing can actually manage to stave off a deflationary crash then it's probably the most likely outcome.

The hyperinflation and dollar collapse scenario some are predicting is much more outlandish. Frankly so is the V-bottom economic recovery scenario. Something in between seems rather likely.

Nah.

Buffet has his system and beliefs which have worked for him since time immemorial. Bitcoin pisses all over how he operates and his preferences. It would be seriously off kilter if he did go all in. His position is consistent. He doesn't do gold either.

@stompix you’re absolutely correct because for few minutes I was wondering if this is some new guy we’re talking about, or it’s the old one who’s opinion these days don’t really matter.


@gentlemand doesn’t this remind you of a very wise investor who’s yet refusing to accept bitcoins, clue his last name is Buffet, and both of them have one thing in common it’s their rigid approach which is blocking their view to see a different picture.

Source:

https://www.cnbc.com/2019/05/04/warren-buffett-says-bitcoin-is-a-gambling-device-with-a-lot-of-frauds-connected-with-it.html

If you make a career out of one point of view you eventually make yourself totally irrelevant as you can't give it up and acknowledge what's actually happening.

Even if you're eventually proven right, if you spent all that time repeatedly calling for something that won't arrive for another few years that doesn't make you look like a genius, it makes you look lazy. Almost everyone's proven right eventually if they pound the same points over and over.

Same goes for Zerohedge, the site that predicted 200 of the last 2 recessions.

Some people might take you seriously on that, so a bit of clarification:

https://www.banking.senate.gov/imo/media/doc/Roubini%20Testimony%2010-11-18.pdf


Anyhow, Roubini has been wrong so many times since 2007 that has passed beyond the broken clock scenario unless seconds are ears and we must wait for another 36 millennia to hit a prediction right. Seeing all the doomsday lovers screaming the end of the world is coming makes me more optimistic.

This is absolutely true. We are only seeing the very beginnings of the economic impact at the moment.
I'm unsure about the inevitability of stagflation, but it's certainly a very real possibility. I would say the 'stag' part is extremely likely, the 'flation' part perhaps less so.

No. It's a very possible scenario. For many businesses the real financial impact of this year's problem will happen next year. The chances the pandemic will be still here during the winter are pretty high and this could cause a disastrous 2021.
Of course, nothing is certain under the sun.

It's dependent on the fiscal policies as well as the health policies the government takes. Every economy has taken a hit, some more than others. Uncertainty about the future is high and this could stall growth as people would be preparing for the worse and spending would remain very low even if lockdown is effectively lifted. The government actions would be vital, it could raise the optimism and create a market environment which is attractive if the right choices are made or it could raise the negative sentiments if they make the wrong ones.

Most governments missed the chance to act decisively during the onset of the pandemic leading to a greater economic hit, decisive action is still needed. Health measures need to be taken more seriously, as it's closely linked with economic recovery. If countries open up too much, too early, there's the risk of a second wave which would spread fear and panic and slow down any recovery.

The article is not pessimistic imo, it would be the reality if not prevented through; improved infrastructure, better health and safety practices, well regulated cash injections.

With all the uncertainty with regards to the consequences of the action of today, the specific thing would be the catching up of the inflation crisis part. I think you cannot entirely escape the fact that it's inevitable, we don't have it yet, but it's everywhere. Remember it's not just the US but the whole world is "solving" the problem in that kind of way, printing money out of thin air. I think we cannot blame them entirely but it's the responsibility of the government. These hard times, it's hard to get focused on the infrastructures and school systems. Focusing on one aspect would be good enough right now, the health-care system.

It's not pessimistic, IMO. It's realistic. 

Roubini, the economist that we all love predicts about the future stagflation:

Source: https://www.msn.com/en-us/finance/markets/stiglitz-urges-capitalism-rethink-as-roubini-invokes-stagflation/ar-BB15SyLD

The last stagflation in the '70s was quite long and painful, are you ready to go through this crisis once more? Or this guy is just too pessimistic?
summon @realDonaldTrump