UNITED STATES (OBSERVATORY NEWS) — Nouriel Roubini, a professor of economics who predicted the 2008 global crisis, warned of misconceptions around the world about the coronavirus COVID-19.
Roubini, who is called the “petrel of the crisis,” claims investors are too calm and confident in spite of stock sales beginning in January, when the first reports of a possible coronavirus epidemic appeared.
In his opinion, the risk of a slowdown in growth and a decline in the global economy is increasing. This will lead to stagnation in different countries, a drop in income levels, and to another global crisis.
“Investors are fooling themselves about how serious the outbreak of coronavirus will be. Despite big sales in the stock markets this week, the worst is yet to come,” said Nouriel Roubini in an article in the Financial Times .
Many investors are ready for stock indices to fall, but, in their opinion, sales are unlikely to exceed 10 percent on average.
Philistines and financiers rely on the power of financial regulators – to support the US Federal Reserve and other central banks around the world, which, if necessary, provide cheap money to save the economy.
Roubini does not believe in a quick victory over the epidemic, nor does he believe that after the first quarter of 2020 the spread of coronavirus will decrease, as was announced in China.
The global economy will recover long after this epidemic. Roubini called erroneous the expectation that “politicians will quickly come to the rescue.” In his opinion, monetary authorities “will react very slowly or will not react at all,” since each country has its own “political and other restrictions.”
Sales of stocks, and the weakening of currencies in world markets began in January, and accelerated by the end of February. The most vulnerable markets are oil, and developing countries with large investments of speculative short-term money. If panic intensifies, this money will rush into more reliable instruments – gold, or US government bonds. Oil prices will collapse, the fall of stock indices around the world will accelerate, the weakening of the currencies of developing countries will begin, and this can lead to a new world crisis.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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