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The economics professor Nouriel Roubini, also known as “Dr. Doom “due to its accurate prediction of the 2008 financial crisis, a hard landing awaits the world economy recent interview with Bloomberg predicts a “long and bad” recession from the end of the year and possibly for the next one.
The scope will be enormous, we must believe Roubini.
– Even in a normal recession, the S&P 500 can drop by 30%, he tells the media house.
He himself thinks the decline will be 40% for the general Wall Street index.
The professor is also concerned about the US central bank’s battle against inflation. The goal of reducing inflation to two percent is possible, but “mission impossible” without simultaneously crashing the economy, he believes. Like many other analysts, Roubini is asking for a 0.75 percentage point rate hike at tomorrow’s rate meeting, with two consecutive 0.5 percentage point leaps.
But it won’t stop there, we have to believe “Dr. Doom”: persistent inflation will force the central bank to raise interest rates further, to the point that we can see the 5.
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Death from “zombies”.
When the world economy is first hit by the recession, the professor sees no easy way out. He tells Bloomberg that he doesn’t expect government stimulation of the economy to be of much help. Too much pressure on the accelerator pedal will cause overheating.
The consequence? Stagflation similar to that seen in the 1970s.
Roubini believes that many “zombie institutions, zombie families, businesses, banks, shadow banks and zombie states will die” as a result.
“Zombie” is a nickname in the economy for companies that don’t fail despite weak returns and an inability to pay off debt.
Inflation, global supply problems, Russia’s war in Ukraine, and China’s zero tolerance line for covid will increase costs and weaken growth.
And as a final doomsday prophecy: it’s only a matter of time before the next pandemic hits us, according to Bloomberg. The advice to investors is therefore as follows:
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