Entrevista com Roubini, o "bruxo" que previu a crise de 2008 - Diego Viana (Valor Econômico)

 Entrevista com Roubini, o "bruxo" que previu a crise de 2008

 

O melhor e o pior dos tempos

Entrevista /  Nouriel Roubini destaca como avanços tecnológicos podem melhorar nossas vidas, mas comportamento humano pode pôr tudo a perder.

Por Diego Viana, para o Valor, de São Paulo

31/08/2924

 

Nouriel Roubini se expressa como Charles Dickens (1812-1870) para falar do mundo atual: é o melhor dos tempos e o pior dos tempos. Se o romancista inglês se referia ao século XVIII da Revolução Francesa, o economista ítalo-iraniano-americano está falando de uma era marcada por automação e inteligência artificial, situação geopolítica fragmentada, mudança climática, extremismo político e protecionismo comercial.

Roubini veio ao Brasil neste mês para participar da série de palestras Fronteiras do Pensamento. Neste ano, o evento sugere aos participantes que respondam à seguinte pergunta: "Quem está no controle"? A incerteza sobre a capacidade de comando em escala mundial é uma das maiores preocupações do economista. A falta de uma potência hegemônica neste século, afíima, reduz o incentivo para ofertar bens públicos globais, principalmente a segurança. Como consequência, o perigo de conflitos internacionais se amplifica.

Ainda assim, pelo menos no curto prazo, o autor do livro "Mega-ameaças" (2022, ed. Crítica), que ficou conhecido como "Dr. Catástrofe" por prever a crise de 2008, enxerga um cenário benigno. Apesar do recente solavanco nos mercados, a economia americana segue crescendo, com reflexos no resto do planeta. Mas a expansão também envolve perigos: se o Federal Reserve contrariar as expectativas e se vir obrigado a manter os juros altos por mais tempo, empresas podem começar a quebrar, provocando uma recessão. 

 

Trechos da entrevista de Roubini ao Valor:

Valor: A pergunta "Quem está no controle?" sugere que rumamos para um mundo anárquico. É o caso?

Nouriel Roubini: É uma pergunta importante. A estabilidade da ordem geopolítica requer a hegemonia de um poder que esteja, de fato, no comando do mundo. Esse poder provê bens públicos globais, porque seus interesses são tais que está disposto a fornecer segurança, livre comércio, coisas assim. O século XIX foi do Império Britânico, com a Pax Britannica. O século XX foi, em grande parte, o século da Pax Americana. Tivemos a Guerra Fria, claro, com a rivalidade entre Estados Unidos e União Soviética, mas a URSS estava desconectada da economia global. O colapso soviético levou a um momento unipolar. Parecia que os EUA seriam o único país hegemônico. Hoje, a ascensão da China sugere a vinda de um mundo bipolar, mas tudo aponta, na verdade, para a multipolaridade. Há outras potências, como a União Europeia, que é fragmentada, mas ainda um importante ator econômico global. Existem novas potências emergentes, como a índia. Há também os Estados médios do Sul global, importantes tanto regionalmente quanto, até certo ponto, para os assuntos globais. O poder dos EUA está reduzido, então fornecer bens públicos globais talvez não seja tão fácil.

Valor: É um estado transitório, rumo à "Pax Sinica"? Ou a ausência de hegemonia será prolongada?

Roubini: Por um tempo, pensou-se que o século XXI seria o século chinês. A China crescia a 10% e seu PIB parecia a caminho de ultrapassar o americano. Mas o motor de crescimento chinês estagnou. Estava em 7% antes da covid, depois passou a 5%. Estudos sugerem que, sem mudar suas políticas, a China pode chegar à taxa potencial de apenas 3% até o fim da década. Por outro lado, por causa da tecnologia, alguns argumentam que o crescimento potencial dos EUA, que anda em 1,8%, até o final da década pode ser de 3% ou mais. Acho que o século americano pode perdurar. O poder americano, seja comercial, financeiro, bancário, tecnológico, econômico, político, geopolítico ou militar, ainda é incomparável. Apesar do mau funcionamento de seu sistema político, o crescimento americano pode acelerar bastante. Já a China, com o capitalismo de Estado e o excesso de dívidas, com a crise no setor imobiliário e o estrangulamento do setor privado, pode acabar em uma armadilha de renda média.

Valor: Os mercados passaram por um solavanco recentemente, com começo no Japão e reflexos nos Estados Unidos. Depois, a situação se estabilizou. Ainda podemos classificar o cenário econômico global como benigno?

Roubini: O cenário é benigno, apesar de alguns riscos importantes.

Valor: Que riscos são esses?

Roubini: A desaceleração americana tem sido bem mais lenta do que o Fed previa. No momento, espera-se que sejam feitos cortes em setembro e dezembro, mas depois disso é possível que o afrouxamento não prossiga. Com isso, as condições financeiras continuariam apertadas. Dado o forte endividamento público e privado, altas taxas de jurospodem prejudicar as empresas que dependem de dinheiro barato. Paradoxalmente, passamos do risco de pouso forçado para o pouso suave, depois o não pouso, o que reintroduz o perigo de cair em recessão.

Valor: Sendo assim, o que é o mais importante a observar neste momento?

Roubini: O futuro da economia depende muito de quem será eleito em novembro. A política econômica seria bem diferente com Donald Trump ou Kamala Harris. Algumas políticas que Trump pretende implementar são inflacionárias, com protecionismo, enfraquecimento do dólar, interferência na política monetária, cortes permanentes de impostos. Isso aumentaria os déficits ainda mais, tornando-os menos sustentáveis, o que traz consigo o risco de que os juros sejam empurrados para cima. Não estamos fora de perigo. Primeiro, porque o Fed talvez não possa reduzir muito os juros. Segundo, porque, dependendo da política econômica do ano que vem, pode haver tormentas.

Valor: O sr. disse que o potencial de crescimento dos EUA será maior, graças à tecnologia. Mas a adoção de tecnologia tem sido bastante rápida. É possível que o crescimento esteja acontecendo com inflação em queda porque esse potencial maior já entrou em cena?

Roubini: É uma possibilidade. A empolgação com a inteligência artificial generativa levou a uma onda importante de investimentos nos EUA. Todo mundo está entrando na IA. Os produtores desses modelos estão comprando mais chips, mais bancos de dados, mais eletricidade. Além disso, nos EUA, as leis de infraestrutura, da indústria de chips e da redução da inflação (IRA) levaram a um boom de investimentos industriais, com centenas de bilhões de dólares em nova capacidade manufatureira prometidos para a próxima década. A antiga infraestrutura dos EUA começa a ser renovada e há incentivos à energia renovável. São coisas grandes, que provavelmente atuam tanto no lado da oferta quanto da demanda. Elas podem explicar por que o crescimento tem sido forte.

Valor: Pelo prisma do mundo em desenvolvimento, os juros altos nos EUA preocupam porque reduzem o fluxo de capital e desvalorizam as moedas. Como é o cenário para o Sul global?

Roubini: Se prevalecer o cenário benigno e o Fed mantiver os juros no nível atual, há problemas. Um país que tenha tomado emprestado em dólar vai ter um custo de serviço da dívida mais alto. Isso vale também para quem tomou emprestado em moeda local, porque quando os juros em dólar estão altos, os juros em moeda doméstica têm que ser ainda mais elevados, para evitar a depreciação. Essa depreciação de moedas pode ser útil para a exportação desses países, mas é inflacionária. Além disso, o câmbiotambém eleva o preço em dólar das commodities, o que é uma desvantagem para exportadores. Essa combinação de fatores implica ventos contrários significativos para muitos mercados emergentes.

Valor: Na reunião do G20, houve avanços na ideia da taxa global sobre os mais ricos. Impostos internacionais são discutidos desde a taxa Tobin. É uma ideia eficaz?

Roubini: As últimas décadas trouxeram um aumento na desigualdade ao redor do mundo. Isto provocou reações contra a democracia liberal e o capitalismo, porque muitas pessoas se sentem deixadas para trás. Há grande insegurança econômica. As reações são variadas, mas todas levam a algum grau de populismo. Por isso, precisamos fazer algo quanto à desigualdade. Aumentar o bolo econômico, dando mais oportunidades para as pessoas se educarem e desenvolverem habilidades, é sempre a melhor política. Mas faz sentido argumentar que é preciso taxar os vencedores, em termos de renda ou riqueza. É preciso chegar a um acordo global, assim como a OCDE obteve um acordo sobre o imposto corporativo mínimo. Só a cooperação internacional pode evitar esse problema.

Valor: A política americana tem tudo, menos tédio. Um candidato foi baleado, outro desistiu da corrida. Nunca sabemos o que vai acontecer a seguir. Como um investidor navega essa situação?

Roubini: É difícil prever aonde essa eleição vai conduzir. Agora os democratas têm uma candidata jovem, uma mulher afro-americana que pode energizar a militância. Há o risco de que ambos os lados se declarem vencedores, levando a decisão até a Suprema Corte, mais ou menos como em 2000. Podemos até repetir janeiro de 2021, só que de um jeito ainda mais caótico, com violência nas ruas se Trump perder. Tudo pode acontecer. Os mercados sabem que haverá diferenças na política externa entre Trump e os democratas, mas tendem a desconsiderá-las, porque nesse campo as variações não costumam ser grandes. No Oriente Médio, Trump deve pressionar os palestinos por um acordo de paz com Israel. Há preocupação de que ele abandone a Ucrânia, mas se fizer isso, haverá um efeito dominó. A China se veria em condições de assumir Taiwan sem reação. Mas a relação com a China é um ponto de concordância entre republicanos e democratas, são ambos agressivos. Sabemos muito pouco do que virá. Há algumas ideias, mas é difícil precificá-las nos mercados.

Valor: Como alocar os investimentos perante esse quadro?

Roubini: Não é nada fácil. Esse ponto sobre a política externa ajuda, e algumas coisas são legíveis na política fiscal. O risco para a democracia é real, o que bagunça tudo. Acho que os mercados vão caminhar passo a passo, esperando para ver o que vem a cada momento. Há potenciais impactos ainda maiores, como a escalada da guerra no Oriente Médio ou na Ucrânia. Mas os mercados estão ignorando essas coisas, como se fossem um risco secundário. A melhor coisa é esperar para ver, em vez de se apressar em tomar alguma posição.

Valor: O sr. mencionou três iniciativas econômicas de Biden: leis de infraestrutura, de chips, de redução da inflação. Elas foram consideradas o retomo da política industrial ao centro da economia do planeta. Sem Biden, a política industrial permanece?

Roubini: A política industrial voltou de vez, não só nos EUA Os chineses a praticam há tempos, os europeus estão tentando. Em um mundo onde o crescimento é impulsionado pela tecnologia, dados, conhecimento e inovação, não posso deixar o mercado fazer tudo. Tenho que usar políticas industriais com inteligência para afetar a economia. Já nos afastamos do lais-sez-faire. Os governos estão pensando em como garantir a manufatura, como atrair ou resguardar empregos de qualidade. No processo, muitos erros podem ser cometidos, mas também há coisas boas que podem ser feitas. O resultado final pode ser bom ou ruim, ainda não sabemos. Mas todo mundo está fazendo.

Valor: O sr. citou a Europa como um dos polos do mundo fragmentado. Há debates na Europa sobre a derrocada do continente. Ela será ainda um grande ator na cena global?

Roubini: Isso depende de fazer as reformas estruturais e concluir o mercado único. Hoje, a perspectiva não está boa para a Europa. Há problemas na vizinhança, com ameaças vindas do Oriente Médio e da Rússia. Os EUA têm dois grandes oceanos e vizinhos amigáveis. Os EUA são independentes em energia, a Europa não. Os EUA são um mercado totalmente integrado, enquanto a Europa ainda não concluiu a união economicamente, nem politicamente. A Europa envelhece mais do que os EUA, que recebe mais imigrantes. A Europa está sujeita ao risco de que a Guerra Fria entre EUA e China piore. Ela exporta muito para a China e tem investimentos diretos lá. Está próxima do Oriente Médio, onde há turbulência, que pode levar a um choque energético como o da década de 1970, se houver guerra entre Israel e o Irã. Os desafios são todos solucionáveis, mas é preciso que a Comissão Europeia seja enérgica e aprove legislação para mudar os incentivos na direção de mais inovação, competitividade, dinamismo econômico e empreendedorismo. A Europa começa o jogo com grande capital humano, instituições fortes, renda alta. É rica, mas não se pode viver dos louros do passado.

Valor: Um ativo que a Europa preza muito é o "efeito Bruxelas", pelo qual as regulações europeias são adotadas no resto do mundo. Pode ser o caso da lei de IA recém-aprovada?

Roubini: Os europeus alegam que um dos seus papéis é fornecer parâmetros regulatórios, graças ao tamanho e importância de seu mercado. Mas é um comportamento complacente. Os grandes líderes em IA hoje são os EUA e a China, além de bolsões de excelência em Israel, Reino Unido e Japão. A Europa tem ambições nesse campo, mas não é tão forte. Mesmo antes da revolução da IA, os europeus não foram capazes de ocupar mercados com inovação. E se você não está inovando, tentar regular é ingênuo. Um: porque sua regulamentação pode ser demais e sufocar até mesmo o mínimo de investimento que você poderia obter. Dois: você pode errar. E três: não é óbvio que os outros vão adotar suas regras. Eu gastaria mais tempo tentando criar inovações em IA na Europa, em vez de regulá-la de uma forma que dá ainda menos incentivo para fazer parte dessa pesquisa.

Valor: Em resumo, que falta faz ter alguém "no controle"?

Roubini: Remeto ao título de um artigo que escrevi: "Inteligência artificial vs. estupidez humana". Se bem usada, a IA pode aumentar o crescimento, a produtividade, o bolo econômico. Mesmo se a maior parte da renda gerada for para poucos, sempre se pode taxá-los e redistribuir. O problema é a estupidez: não vivemos no mundo das máquinas inteligentes, mas de conflitos geopolíticos, reação contra a democracia e a globalização, relocalização da manufatura, nacionalismo econômico e mudanças climáticas. Essa mesma tecnologia pode ser usada para criar falsificações profundas, aumentar a desigualdade, aprofundar o desemprego e inclusive construir mais armas, para lutar guerras maiores. Vivemos no melhor dos tempos, porque a tecnologia pode nos fazer viver mais, melhor e com mais renda. E vivemos no pior dos tempos, com as mega-ameaças impulsionadas pelo comportamento humano. Podemos sobreviver aos próximos 20 anos sem guerra global, sem outra pandemia, sem catástrofe climática, sem crises financeiras? Se conseguirmos, o futuro será brilhante, usando a tecnologia para melhorar a situação de todos. 

 

China Confronts the Middle-Income Trap - Nouriel Roubini (Project Syndicate)

China Confronts the Middle-Income Trap

 Nouriel Roubini

Project Syndicate, Apr 4, 2024

While China obviously needs to boost private-sector confidence and revive growth with a more sustainable economic model, it is not clear that Chinese leaders fully appreciate the challenges they face. The shift back to state capitalism over the last decade is plainly incompatible with President Xi Jinping’s development goals.

NEW YORK – At this year’s China Development Forum (the highest-level annual meeting between senior Chinese policymakers and top CEOs, current and former policymakers, and academics like me), the discussion focused squarely on the risk of China falling into the dreaded “middle-income trap.” After all, few emerging economies have successfully joined the ranks of high-income countries.

Will China be an exception to this pattern? Following 30-plus years in which China achieved annual growth rates close to 10%, its economy has slowed sharply this decade. Even last year, with the strong rebound from the “zero-COVID” era, officially measured growth was only 5.2%. Worse, the International Monetary Fund estimates that China’s growth will fall to 3.4% per year by 2028, and, given its current policies, many analysts expect its potential growth rate to be only 3% by the end of this decade. If that happens, China will indeed find itself in the middle-income trap. 

Moreover, China’s problems are structural, rather than cyclical. Among other factors, its slowdown is due to rapid aging, a busted real-estate bubble, a massive overhang of private and public debt (now close to 300% of GDP), and a shift from market-oriented reforms back toward state capitalism. Credit-fueled investment has grown excessive as state-owned banks lend to state-owned enterprises (SOEs) and local governments. At the same time, the government has been bashing the tech sector and other private enterprises, eroding business confidence and private investment.

In this new period of deglobalization and protectionism, China appears to have hit the limits to export-led growth. The West’s geopolitically motivated technology sanctions are constraining the growth of its high-tech sectors and reducing inflows of foreign direct investment (FDI); and the combination of a high domestic household savings rate and low consumption rates (owing to weak social insurance and the low share of household income) is further hampering growth. 

The old Chinese growth model is broken. Initially, China’s low (and thus internationally competitive) wages meant it could rely on light manufacturing and exports, before pursuing massive investments in infrastructure and real estate. Now, Chinese authorities are advocating high-quality growth based on technologically advanced manufacturing and exports (electric vehicles, solar panels, and other green- and high-tech products) led by financial incentives to already-bloated SOEs. But without a matching increase in domestic demand – especially private consumption – over-investment in these sectors will lead to over-capacity and dumping in global markets. 

China’s excess supply (relative to domestic demand) is already producing deflationary pressures, heightening the risk of secular stagnation. When China was smaller and poorer, a sharp increase in its exports was manageable in global markets. But now that it is the world’s second-largest economy, any dumping of its excess capacity will be met by even more draconian tariffs and protectionism targeting Chinese goods.

China therefore needs a new growth model concentrated on domestic services – rather than goods – and private consumption. Services as a share of GDP are too low by global standards, and though Chinese policymakers continue to talk about boosting domestic demand, they seem unwilling to adopt the fiscal and other policies required to boost private consumption and reduce precautionary household savings. The situation demands larger pension benefits, greater health-care provision, unemployment insurance, permanent urban residency for rural migrant workers who currently lack access to public services, higher real (inflation-adjusted) wages, and measures to redistribute SOE profits to households so that they can spend more.

While China obviously needs to boost private-sector confidence and revive growth with a more sustainable economic model, it is not clear that Chinese leaders fully appreciate the challenges they face. While President Xi Jinping has overseen the move back to state capitalism over the last decade, Premier Li Qiang, a known market-oriented reformer, appears to have been sidelined. Li neither held the customary press conference following the recent National People’s Congress nor met with the full foreign delegation at the latest China Development Forum. Instead, Xi himself hosted a smaller delegation of foreign business leaders.

The most charitable interpretation of these signals is that Xi now realizes he needs to engage the private sector and international multinational corporations to restore their confidence and boost FDI, private sector-led growth, and private consumption. Since Li is still around, perhaps he is pushing quietly for “opening-up and reforms,” while keeping a low profile to show deference to Xi. 

But many observers have a more pessimistic interpretation. They note that after sidelining market-oriented technocrats such as Li, former Premier Li Keqiang, former People’s Bank of China Governor Yi Gang, advisers like Liu He and Wang Qishan, and a variety of financial regulators, Xi has created new party committees on economic and financial affairs that supersede government bodies. He has surrounded himself with advisers like He Lifeng, the vice premier for the economy, and Zheng Shanjie, the new head of the National Development and Reform Commission, who are sympathetic to the obsolete dogma of state capitalism. 

Lofty statements and mantras about reforms and attracting foreign investment mean little. What matters are the actual policies that China pursues over the next year, which will show whether it can circumvent the middle-income trap and return to the path of more robust growth.  

Nouriel Roubini

Writing for PS since 2007 
187 Commentaries

Nouriel Roubini, Professor Emeritus of Economics at New York University’s Stern School of Business, is Co-Founder of Atlas Capital Team, CEO of Roubini Macro Associates, Co-Founder of TheBoomBust.com, and author of Megathreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them (Little, Brown and Company,  2022). He is a former senior economist for international affairs in the White House’s Council of Economic Advisers during the Clinton Administration and has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com, and he is the host of NourielToday.com.

The Age of Megathreats - Nouriel Roubini (Project Syndicate)

Um pouco exagerado, mas tocando nos pontos certos...  

Project Syndicate, Praga – 5.11.2022

The Age of Megathreats

For four decades after World War II, climate change and job-displacing artificial intelligence were not on anyone’s mind, and terms like "deglobalization" and "trade war" had no purchase. But now we are entering a new era that will more closely resemble the tumultuous and dark decades between 1914 and 1945.

Nouriel Roubini

 

New York – Severe megathreats are imperiling our future – not just our jobs, incomes, wealth, and the global economy, but also the relative peace, prosperity, and progress achieved over the past 75 years. Many of these threats were not even on our radar during the prosperous post-World War II era. I grew up in the Middle East and Europe from the late 1950s to the early 1980s, and I never worried about climate change potentially destroying the planet. Most of us had barely even heard of the problem,

Moreover, after the US-Soviet détente and US President Richard Nixon’s visit to China in the early 1970s, I never really worried about another war among great powers, let alone a nuclear one. The term “pandemic” didn’t register in my consciousness, either, because the last major one had been in 1918.And I didn’t fathom that artificial intelligence might someday destroy most jobs and render Homo sapiens obsolete, because those were the years of the long “AI winter.”

Similarly, terms like “deglobalization” and “trade war” had no purchase during this period. Trade liberalization had been in full swing since the Great Depression, and it would soon lead to the hyper-globalization that began in the 1990s. Debt crises posed no threat, because private and public debt-to-GDP ratios were low in advanced economies and emerging markets, and growth was robust. No one had to worry about the massive build-up of implicit debt, in the form of unfunded liabilities from pay-as-you-go social security and health-care systems. The supply of young workers was rising, the share of the elderly was still low, and robust, mostly unrestricted immigration from the Global South to the North would continue to prop up the labor market in advanced economies.

Against this backdrop, economic cycles were contained, and recessions were short and shallow, except for during the stagflationary decade of the 1970s; but even then, there were no debt crises in advanced economies, because debt ratios were low. The kind of financial cycles that lead to crises were contained not just in advanced economies but even in emerging markets, owing to the low leverage, low risk-taking, solid financial regulation, capital controls, and various forms of financial repression that prevailed during this period. The advanced economies were strong liberal democracies that were free of extreme partisan polarization. Populism and authoritarianism were confined to a benighted cohort of poorer countries.

 

GOODBYE TO ALL THAT

 

Fast-forward from this relatively “golden” period between 1945 and 1985 to late 2022, and you will immediately notice that we are awash in new, extreme megathreats that were not previously on anyone’s mind. The world has entered what I call a geopolitical depression, with (at least) four dangerous revisionist powers – China, Russia, Iran, and North Korea – challenging the economic, financial, security, and geopolitical order that the United States and its allies created after WWII.

There is a sharply rising risk not only of war among great powers but of a nuclear conflict. In the coming year, Russia’s war of aggression in Ukraine could escalate into an unconventional

With Chinese President Xi Jinping further consolidating his authoritarian rule, and with the US tightening its trade restrictions against China, the new Sino-American cold war is getting colder by the day. Worse, it could all too easily turn hot over the status of Taiwan, which Xi is committed to reuniting with the mainland, and which US President Joe Biden is apparently committed to defending. Meanwhile, nuclear-armed North Korea has once again been seeking attention by firing rockets over Japan and South Korea.

Cyberwarfare occurs daily between these revisionist powers and the West, and many other countries have adopted a non-aligned posture toward Western-led sanctions regimes. From our contingent vantage point in the middle of all these events, we don’t yet know if World War III has already begun in Ukraine. That determination will be left to future historians – if there are any.

Even discounting the threat of nuclear Armageddon, the risk of an environmental Apocalypse is becoming increasingly serious, especially given that most of the talk about net-zero and ESG (environment, social, and governance) investing is just greenwashing – or greenwishing. The new greenflation is already in full swing, because it turns out that amassing the metals needed for the energy transition requires a lot of expensive energy.

There is also a growing risk of new pandemics that would be worse than biblical plagues, owing to the link between environmental destruction and zoonotic diseases. Wildlife, carrying dangerous pathogens, are coming into closer and more frequent contact with humans and livestock. That is why we have experienced more frequent and virulent pandemics and epidemics (HIV, SARS, MERS, swine flu, bird flu, Zika, Ebola, COVID-19) since the early 1980s. All the evidence suggests that this problem will become even worse in the future. Indeed, owing to the melting of Siberian permafrost, we may soon be confronting dangerous viruses and bacteria that have been locked away for millennia.

Moreover, geopolitical conflicts and national-security concerns are fueling trade, financial, and technology wars, and accelerating the deglobalization process. The return of protectionism and the Sino-American decoupling will leave the global economy, supply chains, and markets more balkanized and fragmented. The buzzwords “friend-shoring” and “secure and fair trade” have replaced “offshoring” and “free trade.”

But on the domestic front, advances in AI, robotics, and automation will destroy more and more jobs, even if policymakers build higher protectionist walls in an effort to fight the last war. By both restricting immigration and demanding more domestic production, aging advanced economies will create a stronger incentive for companies to adopt labor-saving technologies. While routine jobs are obviously at risk, so, too, are any cognitive jobs that can be unbundled into discrete tasks, and even many creative jobs. AI language models like GPT-3 can already write better than most humans and will almost certainly displace many jobs and sources of income. In due course, some scientists believe that Homo sapiens will be rendered entirely obsolete by the rise of artificial general intelligence or machine super-intelligence – though this is a highly contentious subject of debate.

Thus, over time, economic malaise will deepen, inequality will rise even further, and more white- and blue-collar workers will be left behind.

 

HARD CHOICES, HARD LANDINGS

 

The macroeconomic situation is no better. For the first time since the 1970s, we are facing high inflation and the prospect of a recession – stagflation. The increased inflation in advanced economies wasn’t “transitory.” It is persistent, driven by a combination of bad policies – excessively loose monetary, fiscal, and credit policies that were kept in place for too long – and bad luck. No one could have anticipated how much the initial COVID-19 shock would curtail the supply of goods and labor and create bottlenecks in global supply chains. The same goes for Russia’s brutal invasion of Ukraine, which caused a sharp spike in energy, food, fertilizers, industrial metals, and other commodities. Meanwhile, China has continued its “zero-COVID” policy, which is creating additional supply bottlenecks.

While both demand and supply factors were in the mix, it is now widely recognized that the supply factors have played an increasingly decisive role. This matters for the economic outlook, because supply-driven inflation is stagflationary and thus increases the risk that monetary-policy tightening will produce a hard landing (increased unemployment and potentially a recession).

What will follow from the US Federal Reserve and other major central banks’ current tightening? Until recently, most central banks and most of Wall Street belonged to “Team Soft Landing.” But the consensus has rapidly shifted, with even Fed Chair Jerome Powell recognizing that a recession is possible, that a soft landing will be “very challenging,” and that everyone should prepare for some “pain” ahead. The Federal Reserve Bank of New York’s model shows a high probability of a hard landing, and the Bank of England has expressed similar views about the United Kingdom. Several prominent Wall Street institutions have also now made a recession their baseline scenario (the most likely outcome if all other variables are held constant).

History, too, points to deeper problems ahead. For the past 60 years in the US, whenever inflation has been above 5% (it is above 8% today), and unemployment has been below 5% (it is now 3.5%), any attempt by the Fed to bring inflation down toward its 2% target has caused a recession. Thus, a hard landing is much more likely than a soft landing, both in the US and across most other advanced economies.

 

STICKY STAGFLATION

 

In addition to the short-term factors, negative supply shocks and demand factors in the medium term will cause inflation to persist. On the supply side, I count eleven negative supply shocks that will reduce potential growth and increase the costs of production. Among these is the backlash against hyper-globalization, which has been gaining momentum and creating opportunities for populist, nativist, and protectionist politicians, and growing public anger over stark income and wealth inequalities, which is leading to more policies to support workers and the “left behind.”However well-intentioned, such measures will contribute to a dangerous wage-price spiral.

Other sources of persistent inflation include rising protectionism (from both the left and the right), which has restricted trade, impeded the movement of capital, and heightened political resistance to immigration, which in turn has put additional upward pressure on wages. National-security and strategic considerations have further restricted flows of technology, data, and talent, and new labor and environmental standards, as important as they may be, are hampering both trade and new construction.

This balkanization of the global economy is deeply stagflationary, and it is coinciding with demographic aging, not just in developed countries but also in large emerging economies such as China. Because young people tend to produce and save more, whereas older people spend down their savings and require many more expensive services in health care and other sectors, this trend, too, will lead to higher prices and slower growth.

Today’s geopolitical turmoil further complicates matters. The disruptions to trade and the spike in commodity prices following Russia’s invasion were not just a one-off phenomenon. The same threats to harvests and food shipments that arose in 2022 may well persist in 2023. Moreover, if China does finally end its zero-COVID policy and begin to restart its economy, a surge in demand for many commodities will add to the global inflationary pressures. There is also no end in sight for Sino-Western decoupling, which is accelerating across all dimensions of trade (goods, services, capital, labor, technology, data, and information). And, of course, Iran, North Korea, and other strategic rivals to the West could soon contribute in their own ways to the global havoc.

Now that the US dollar has been fully weaponized for strategic and national-security purposes, its position as the main global reserve currency could eventually begin to decline, and a weaker dollar would of course add to inflationary pressures in the US. More broadly, a frictionless world trading system requires a frictionless financial system. But sweeping primary and secondary sanctions have thrown sand in what was once a well-oiled machine, massively increasing the transaction costs of trade.

On top of it all, climate change, too, will create persistent stagflationary pressures. Droughts, heat waves, hurricanes, and other disasters are increasingly disrupting economic activity and threatening harvests (thus driving up food prices). At the same time, demands for decarbonization have led to underinvestment in fossil-fuel capacity before investment in renewables has reached the point where they can make up the difference. Today’s large energy-price spikes were inevitable.

The increased likelihood of future pandemics also represents a persistent source of stagflation, especially considering how little has been done to prevent or prepare for the next one. The next contagious outbreak will lend further momentum to protectionist policies as countries rush to close borders and hoard critical supplies of food, medicines, and other essential goods.

Finally, cyberwarfare remains an underappreciated threat to economic activity and even public safety. Firms and governments will either face more stagflationary disruptions to production, or they will have to spend a fortune on cybersecurity. Either way, costs will rise.

 

THE WORST OF ALL POSSIBLE ECONOMIES

 

When the recession comes, it will not be short and shallow but long and severe. Not only are we facing persistent short- and medium-term negative supply shocks, but we are also heading into the mother of all debt crises, owing to soaring private and public debt ratios over the last few decades. Low debt ratios spared us from that outcome in the 1970s. And though we certainly had debt crises following the 2008 crash – the result of excessive household, bank, and government debt – we also had deflation. It was a demand shock and a credit crunch that could be met with massive monetary, fiscal, and credit easing.

Today, we are experiencing the worst elements of both the 1970s and 2008. Multiple, persistent negative supply shocks have coincided with debt ratios that are even higher than they were during the global financial crisis. These inflationary pressures are forcing central banks to tighten monetary policy even though we are heading into a recession. That makes the current situation fundamentally different from both the global financial crisis and the COVID-19 crisis. Everyone should be preparing for what may come to be remembered as the Great Stagflationary Debt Crisis.

While central banks have been at pains to sound more hawkish, we should be skeptical of their professed willingness to fight inflation at any cost. Once they find themselves in a debt trap, they will have to blink. With debt ratios so high, fighting inflation will cause an economic and financial crash that will be deemed politically unacceptable. Major central banks will feel as though they have no choice but to backpedal, and inflation, the debasement of fiat currencies, boom-bust cycles, and financial crises will become even more severe and frequent.

The inevitability of central banks wimping out was recently on display in the United Kingdom. Faced with the market reaction to the Truss government’s reckless fiscal stimulus, the BOE had to launch an emergency quantitative-easing (QE) program to buy up government bonds. That sad episode confirmed that in the UK, as in many other countries, monetary policy is increasingly subject to fiscal capture.

Recall that a similar turnaround occurred in 2019, when the Fed, after previously signaling continued rate hikes and quantitative-tightening, stopped its QT program and started pursuing a mix of backdoor QE and policy-rate cuts at the first sign of mild financial pressures and a growth slowdown. Central banks will talk tough; but, in a world of excessive debt and risks of an economic and financial crash, there is good reason to doubt their willingness to do “whatever it takes” to return inflation to its target rate.

With governments unable to reduce high debts and deficits by spending less or raising revenues, those that can borrow in their own currency will increasingly resort to the “inflation tax”: relying on unexpected price growth to wipe out long-term nominal liabilities at fixed interest rates.

How will financial markets and prices of equities and bonds perform in the face of rising inflation and the return of stagflation? It is likely that, as in the stagflation of the 1970s, both components of any traditional asset portfolio will suffer, potentially incurring massive losses. Inflation is bad for bond portfolios, which will take losses as yields increase and prices fall, as well as for equities, whose valuations are hurt by rising interest rates.

For the first time in decades, a 60/40 portfolio of equities and bonds suffered massive losses in 2022, because bond yields have surged while equities have gone into a bear market. By 1982, at the peak of the stagflation decade, the average S&P 500 firm’s price-to-earnings ratio was down to eight; today, it is closer to 20, which suggests that the bear market could end up being even more protracted and severe. Investors will need to find assets to hedge against inflation, political and geopolitical risks, and environmental damage: these include short-term government bonds and inflation-indexed bonds, gold and other precious metals, and real estate that is resilient to environmental damage.

 

THE MOMENT OF TRUTH

 

In any case, these megathreats will further contribute to rising income and wealth inequality, which has already been putting severe pressure on liberal democracies (as those left behind revolt against elites), and fueling the rise of radical and aggressive populist regimes. One can find right-wing manifestations of this trend in Russia, Turkey, Hungary, Italy, Sweden, the US (under Donald Trump), post-Brexit Britain, and many other countries; and left-wing manifestations in Argentina, Venezuela, Peru, Mexico, Colombia, Chile, and now Brazil (which has just replaced a right-wing populist with a left-wing one).

And, of course, Xi’s authoritarian stranglehold has given the lie to the old idea that Western engagement with a fast-growing China would ineluctably lead that country to open itself up even more to markets and, eventually, to democratic processes. Under Xi, China shows every sign of becoming more closed off, and more aggressive on geopolitical, security, and economic matters.

How did it come to this? Part of the problem is that we have long had our heads stuck in the sand. Now, we need to make up for lost time. Without decisive action, we will be heading into a period that is less like the four decades after WWII than like the three decades between 1914 and 1945. That period gave us World War I; the Spanish flu pandemic; the 1929 Wall Street crash; the Great Depression; massive trade and currency wars; inflation, hyperinflation, and deflation; financial and debt crises, leading to massive meltdowns and defaults; and the rise of authoritarian militarist regimes in Italy, Germany, Japan, Spain, and elsewhere, culminating in WWII and the Holocaust.

In this new world, the relative peace, prosperity, and rising global welfare that we have taken for granted will be gone; most of it already is. If we don’t stop the multi-track slow-motion train wreck that is threatening the global economy and our planet at large, we will be lucky to have only a repeat of the stagflationary 1970s. Far more likely is an echo of the 1930s and the 1940s, only now with all the massive disruptions from climate change added to the mix.

Avoiding a dystopian scenario will not be easy. While there are potential solutions to each megathreat, most are costly in the short run and will deliver benefits only over the long run. Many also require technological innovations that are not yet available or in place, starting with those needed to halt or reverse climate change. Complicating matters further, today’s megathreats are interconnected, and therefore best addressed in a systematic and coherent fashion. Domestic leadership, in both the private and public sector, and international cooperation among great powers is necessary to prevent the coming Apocalypse.

Yet there are many domestic and international obstacles standing in the way of policies that would allow for a less dystopian (though still contested and conflictual) future. Thus, while a less bleak scenario is obviously desirable, a clear-headed analysis indicates that dystopia is much more likely than a happier outcome. The years and decades ahead will be marked by a stagflationary debt crisis and related megathreats – war, pandemics, climate change, disruptive AI, and deglobalization – all of which will be bad for jobs, economies, markets, peace, and prosperity.

 

Nouriel Roubini, Professor Emeritus of Economics at New York University’s Stern School of Business, is Chief Economist at Atlas Capital Team, CEO of Roubini Macro Associates, Co-Founder of TheBoomBust.com, and author of MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them (Little, Brown and Company,  2022). He is a former senior economist for international affairs in the White House’s Council of Economic Advisers during the Clinton Administration and has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com, and he is the host of NourielToday.com.

 

Ultimos dias, perigosos, de Trump: um projeto de destruir a democracia internamente e precipitar conflitos externamente - Nouriel Roubini

Tanto quanto Bolsonaro, Trump atua por diretivas presidenciais que podem ter consequências nefastas para o país e o mundo.  

America Is the New Center of Global Instability

Following the storming of the US Capitol, President Donald Trump is desperate for an exit ramp that will preserve both his fragile ego and his future political influence. Unfortunately, that conundrum leaves him with few options other than to foment even more chaos both at home and abroad.

Nouriel Roubini

Straits Times, Singapura – 13.1.2021

 

New York - Whether the storming of the US Capitol was an attempted coup, an insurrection, or an assault on democracy is merely a question of semantics. What matters is that the violence was aimed at derailing a legitimate transition of power for the benefit and at the behest of a dangerous madman. President Donald Trump, who has never hidden his dictatorial aspirations, should now be removed from power, barred from public office, and prosecuted for high crimes.

After all, the events of January 6 may have been shocking, but they were not surprising. I and many other commentators had long warned that the 2020 election would bring civil unrest, violence, and attempts by Trump to remain in power illegally. Beyond his election-related crimes, Trump is also guilty of a reckless disregard for public health. He and his administration bear much of the blame for the massive COVID-19 death toll in the United States, which accounts for only 4% of the global population but 20% of all coronavirus deaths.

Once a beacon of democracy, rule of law, and good governance, the US now looks like a banana republic that is incapable of controlling either a contagious disease – despite spending more on health care per capita than any other country – or mobs incited by a wannabe dictator. Authoritarian leaders around the world are now laughing at the US and scoffing at American critiques of others’ political misrule. As if the damage done to US soft power over the past four years was not immense enough, Trump’s failed insurrection has undermined America’s standing even more.

Worse, although President-elect Joe Biden will be inaugurated in about a week, that is plenty of time for Trump to create more mayhem. Right-wing militias and white supremacists are already planning more acts of protest, violence, and racial warfare in cities across the US. And strategic rivals such as Russia, China, Iran, and North Korea will be looking to exploit the chaos by sowing disinformation or launching cyber-attacks, including potentially against critical US infrastructure.

At the same time, a desperate Trump may try to “wag the dog” by ordering a strike – perhaps with a tactical nuclear warhead – on Iran’s main nuclear facility in Natanz, on the grounds that it is being used to enrich uranium. Far from this being out of the question, the Trump administration has already held drills with stealth bombers and fighter jets – loaded, for the first time, with tactical nuclear weapons – to signal to Iran that its air defenses are no defense at all.

No wonder Speaker of the House Nancy Pelosi felt the need to reach out to the chairman of the US Joint Chiefs of Staff to discuss steps to prevent a nuclear strike by the Dr. Strangelove in the White House. Whereas an unwarranted order to launch a nuclear attack on a target with a large civilian population would be rejected by the military as obviously “illegal,” an attack on a military target in a non-populated area might not be, even if it would have dire geopolitical consequences. Moreover, Trump knows that both Saudi Arabia and Israel would tacitly support an attack on Iran (indeed, the US may avail itself of Saudi logistical and ground support to carry one out, given the shorter range of nuclear-armed fighter jets).

The prospect of an attack on Iran may give Vice President Mike Pence the pretext he needs to invoke the 25th Amendment and remove Trump from power. But even if this were to happen, it would not necessarily be a win for democracy and the rule of law. Trump could – and likely would – be pardoned by Pence (as Richard Nixon was by Gerald Ford), allowing him to run for president again in 2024 or be a kingmaker in that election, given that he now controls the Republican party and its base. Removing Trump with the promise of a pardon may be a Faustian deal that Pence strikes with Trump.

Because the self-pardon that Trump has been considering might not pass constitutional muster, it is reasonable to assume that he will be groping around for other creative outs. He cannot simply resign and allow Pence to issue a pardon, because that would make him look like a “loser” who accepted defeat (the worst insult in Trump’s egomaniacal lexicon). But if the president were to order an attack on Iran and then become a (pardoned) martyr, he could both preserve his base and avoid accountability. By the same token, Trump cannot risk being impeached (again), because that would open up the possibility of his being disqualified from holding office in the future. By this reasoning, he has every incentive to go out with a bang and on his own terms.

If this all sounds like the final days of Nero “fiddling while Rome burned,” that’s because it is. The decay of the American empire appears to be hastening rapidly. Given how politically, socially, and economically divided the US is, four years of sound leadership under Biden will not be enough to reverse the damage that has been done. Most likely, the Republicans will do everything they can to sabotage the new administration, as they did with former President Barack Obama.

Even before the election, US national-security agencies were warning that domestic right-wing terrorism and violence would remain the primary home-grown threat to the US. With Biden in office, this risk will be higher still. For the last four years, heavily armed white-supremacist militias have been kept relatively at bay by dint of the fact that they had an ally in the White House. But once Trump is gone, the groups whom he has instructed to “stand back and stand by” will not simply accept Democratic control of the presidency and Congress. Trump, operating from Mar-a-Lago, will continue to incite the mob with more lies, conspiracy theories, and falsehoods about a stolen election.

The US will thus most likely be the world’s new epicenter of political and geopolitical instability in the months and years ahead. America’s allies will need to hedge their bets against a future return of Trumpism, and strategic rivals will continue to try to destabilize the US through (P.S,)

 

Nouriel Roubini, Professor of Economics at New York University's Stern School of Business and Chairman of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com, and he is the host of NourielToday.com.

 

Roubini on Coronavirus: Global Disaster - Tim Bartz (Der Spiegel)

I do not believe in a USA-Iran war, despite Trump's willingness to provoke one; but I do not think that Pentagon generals will allow it; there would be serious consequences for America, not only in foreign scenarios...
Paulo Roberto de Almeida

Star Economist Roubini on the Economic Effects of Coronavirus

"This Crisis Will Spill Over and Result in a Disaster"

Economist Nouriel Roubini correctly predicted the 2008 financial crisis. Now, he believes that stock markets will plunge by 30 to 40 percent because of the coronavirus. And that Trump will lose his re-election bid.

Interview Conducted by Tim Bartz

Der Spiegel, Hamburgo – 28.2.2020

Nouriel Roubini is one of the most prominent and enigmatic economists in the world. He correctly predicted the bursting of the U.S. housing bubble in addition to the 2008 financial crisis along with the ramifications of austerity measures for debt-laden Greece. Roubini is famous for his daring prognostications and now, he has another one: He believes that coronavirus will lead to a global economic disaster and that U.S. President Donald Trump will not be re-elected as a result.

DER SPIEGEL: How severe is the coronavirus outbreak for China and for the global economy?

Roubini: This crisis is much more severe for China and the rest of the world than investors have expected for four reasons: First, it is not an epidemic limited to China, but a global pandemic. Second, it is far from being over. This has massive consequences, but politicians don’t realize it.

DER SPIEGEL: What do you mean?

Roubini: Just look at your continent. Europe is afraid of closing its borders, which is a huge mistake. In 2016, in response to the refugee crisis, Schengen was effectively suspended, but this is even worse. The Italian borders should be closed as soon as possible. The situation is much worse than 1 million refugees coming to Europe.

DER SPIEGEL: What are your other two reasons?

Roubini: Everyone believes it’s going to be a V-shaped recession, but people don’t know what they are talking about. They prefer to believe in miracles. It’s simple math: If the Chinese economy were to shrink by 2 percent in the first quarter, it would require growth of 8 percent in the final three quarters to reach the 6 percent annual growth rate that everyone had expected before the virus broke out. If growth is only 6 percent from the second quarter onwards, which is a more realistic scenario, we would see the Chinese economy only growing by 2.5 to 4 percent for the entire year. This rate would essentially mean a recession for China and a shock to the world. 

DER SPIEGEL: And your last point?

Roubini: Everyone thinks that policymakers will react swiftly but that’s also wrong. The markets are completely delusional. Look at fiscal policy: You can do fiscal stuff only in some countries like Germany, because others like Italy don’t have any leeway. But even if you do something, the political process requires a great deal of talking and negotiating. It takes six to nine months, which is way too long. The truth is: Europe would have needed fiscal stimulus even without the corona crisis. Italy was already on the verge of a recession, as was Germany. But German politicians aren’t even thinking about stimulus, despite the country being so exposed to China. The political response is a joke - politicians are often behind the curve. This crisis will spill over and result in a disaster. 

DER SPIEGEL: What role do the central banks have to play?

Roubini: The European Central Bank and the Bank of Japan are already in negative territory. Of course, they could lower rates on deposits even further to stimulate borrowing but that wouldn’t help the markets for more than a week. This crisis is a supply shock that you can’t fight with monetary or fiscal policy.

DER SPIEGEL: What will help?

Roubini: The solution needs to be a medical one. Monetary and fiscal measures do not help when you have no food and water safety. If the shock leads to a global recession, then you have a financial crisis, because debt levels have gone up and the U.S. housing market is experiencing a bubble just like in 2007. It hasn’t been a time bomb so far because we have been experiencing growth. That is over now.

DER SPIEGEL: Will this crisis change the way the Chinese people think of their government?

Roubini: Businesspeople tell me that things in China are much worse than the government is officially reporting. A friend of mine in Shanghai has been locked in his home for weeks now. I don’t expect a revolution, but the government will need a scapegoat.

DER SPIEGEL: Such as?

Roubini: Already, there were conspiracy theories going around about foreign interference when it comes to swine flu, bird flu and the Hong Kong uprising. I assume that China will start trouble in Taiwan, Hong Kong or even Vietnam. They’ll crack down on protesters in Hong Kong or send fighters over Taiwanese air space to provoke the U.S. military. It would only take one accident in the Strait of Formosa and you would see military action. Not a hot war between China and the U.S., but some form of action. This is what people in the U.S. government like Secretary of State Mike Pompeo or Vice President Mike Pence want. It’s the mentality of many people in D.C.

DER SPIEGEL: This crisis is obviously a setback for globalization. Do you think politicians like Trump, who want their companies to abandon production abroad, will benefit?

Roubini: He will try to reap benefits from this crisis, that’s for sure. But everything will change when coronavirus reaches the U.S. You can’t build a wall in the sky. Look, I live in New York City and people there are hardly going to restaurants, cinemas or theaters, even though nobody there has been infected by the virus thus far. If it comes, we are totally fucked.

"Trump is dead. Quote me on that!"

DER SPIEGEL: A perfect scare-scenario for Trump?

Roubini: Not at all. He will lose the election, that’s for sure.

DER SPIEGEL: A bold prediction. What makes you so sure?

Roubini: Because there is a significant risk of a war between the U.S. and Iran. The U.S. government wants regime change, and they will bomb the hell out of the Iranians. But Iranians are used to suffering, believe me, I am an Iranian Jew, and I know them! And the Iranians also want regime change in the U.S. The tensions will drive up oil prices and lead inevitably to Trumps defeat in the elections.

DER SPIEGEL: What makes you so sure?

Roubini: This has always the case in history. Ford lost to Carter after the 1973 oil shock, Carter lost to Reagan due to the second oil crisis in 1979, and Bush lost to Clinton after the Kuwait invasion. The Democratic field is poor, but Trump is dead. Quote me on that!

DER SPIEGEL: A war against Iran is needed to beat Trump?

Roubini: Absolutely, and it’s worth it. Four more years of Trump means economic war!

DER SPIEGEL: What should investors do to brace for the impact?

Roubini: I expect global equities to tank by 30 to 40 percent this year. My advice is: Put your money into cash and safe government bonds, like German bunds. They have negative rates, but so what? That just means that prices will rise and rise - you can make a lot of money that way. And if I am wrong and equities go up by 10 percent instead, that’s also OK. You have to hedge your money against a crash, that is more important. That’s my motto: "Better safe than sorry!"