Experts see trouble ahead for developed world
But most appeared to agree on a sobering array of basic problems standing in the way of true recovery:[…]
Many of the growth drivers in place since the collapse of Lehman Brothers are winding up or have ended, including not only the massive stimulus spending but tax breaks, schemes such as the “cash for clunkers” program and — for some countries like Russia — high commodity prices.
The stimulus deemed necessary to jump-start moribund economies soon causes deficits and debt, upsetting the markets enough to spur austerity — which undermines growth.
Most of the world’s growth stems from a developing world led by China — which is so dependent on exports that it needs the West to continue to buy, and so will suffer if recovery in the rich world proves short-lived.
Europe continues to lose competitiveness partly because of the euro, which — for all the fretting over its dip earlier this year at the height of the Greek debt crisis — remains high in purchasing price parity terms versus the U.S. dollar.
The sector that is widely seen as the spark of the global recession — U.S. real estate — has not recovered, with house-buying flat and the mortgage market, with its related financial instruments, essentially still in ruins.
The jobs picture is not improving and in parts of the developed world — such as Spain, with some 20 percent unemployment — it is disastrous.
Quite a gloomy outlook for many nations, but then again with the likes of Roubini on the panel we can expect some doom from them.
The list seems to be a compilation of several favorite viewpoints of some of the more doomer economists. Yet I can’t help but think that they slid in the China part at #3 to keep from drawing attention to the elephant in the room - the world economy is fundamentally changing from one dominated by the US to one which is truly multi-poled. While this is probably a good thing for world economics, the revanchists in the US will likely gnash their teeth as this truth becomes more and more evident.
Roubini spoke on unemployment:
“I see a very weak labor market,” said Roubini, who gained celebrity for predicting the global collapse of 2008 when others were still celebrating the boom times. He noted noting unemployment is close to 10 percent and almost 17 percent when including discouraged workers or partially employed ones.
He puts the chance of recession at 40 percent or more — a position he has staked in recent weeks — and said even weak growth would still feel like a recession.
“The U.S. has to create 150,000 every month in the private sector just to stabilize the rate and prevent it from rising,” he said. “We’d have to create 300,000 jobs every month for the next three years just to bring back the level of employment to before this recession started,” Roubini said.
“Nobody … believes the U.S. is going to create any time any amount of jobs like that,” he said.
And even that wouldn’t be enough when taking into account the young people entering the labor market, he said.
Not a very upbeat assessment.