Tuesday, 21 Dec 2010 12:39 PM
By Julie Crawshaw
Despite the fact that he believes the real-estate
market is double-dipping and will create another $1
trillion in economic loss, New York University economist
Nouriel Roubini says he expects the U.S. economy to
expand by as much as 3 percent next year.
“The good news is that the recession is over … but there
are several downside risks,” Roubini tells MSNBC. “The
first one is that in spite of growth, firms are not
hiring. Employment is still at nearly 10 percent.”
Roubini also notes that as soon as the housing tax
credit expires, home sales will collapse again, that
many U.S. state and local governments are essentially
bankrupt, and that recent federal economic-stimulus
moves have added $900 billion to the country’s debt.
Though necessary to some degree, austerity does choke
off the possibility of economic growth, Roubini notes.
“In the short term, you need a stimulus because private
demand is not going to cover it, but running large
deficits forever” could result in a “train wreck like in
Ireland, like in Greece.”
“To me, the way to square the circle is by having a
short-term stimulus ... but then commit today to raising
taxes … and committing today about (spending) cuts.”
Bloomberg reports that government bonds are falling the
most in a year as the gap between yields on longer-term
Treasurys show that the Federal Reserve’s second round
of quantitative easing may be its last.
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