Nouriel Roubini, the economist whose dire warnings earned him the nickname “Dr. Doom,” said on Monday that the recent slowdowns in the U.S., Europe, and China is proof that the global “perfect storm” scenario he predicted is on its way.
“(The) 2013 perfect storm scenario I wrote on months ago is unfolding,” Roubini Tweeted on Monday.
You see, Roubini predicted that the four specific elements would come together to create the perfect global economic crisis: a stalled U.S. economy, the EU debt crisis, a slowdown in emerging markets (China), and conflict in Iran.
“Chinese inflation data released on Monday, suggested that the economy is cooling faster than expected, while employment data out of the U.S. on Friday indicated that jobs growth was tepid for a fourth straight month in June,” CNBC’s Ansuya Harjani reports.
“Dr. Doom” also believes that the storm, when it hits, will be far worse than the financial crisis of 2008 because policymakers have run “out of rabbits to pull out of the hat."
Again, he may be 100 percent correct.
Considering that last week the European Central Bank, the Bank of England, and the People’s Bank of China all announced major policy changes that had no effect whatsoever on the markets, policymakers may have indeed run out of tricks to stem the oncoming “storm.”
Watch Roubini explain why the storm may be far worse than 2008 [via Bloomberg]:
“Levitational force of policy easing can only temporarily lift asset prices as gravitational forces of weaker fundamentals dominate over time,” Roubini said.
Bill Smead, CEO of Smead Capital Management, agrees that there is little central banks can do to halt a the global slowdown, CNBC reports.
“Last week, he told CNBC that there is ‘virtually zero chance’ that pump-priming by central banks will succeed,” Harjani writes, “suggesting that policymakers should instead let the economic bust work itself through the system.”
This story has been updated.