Roubini: Prepare for Double-Dip Recession

It could be a while before things get better. At least that’s what Nouriel Roubini, the NYU Stern School of Business professor who is credited with predicting the current financial crisis, writes in the Financial Times. Roubini says there is a “big risk of a double-dip recession,” a W-shaped figure of recovery and relapse. “If [policy-makers] take large fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity soon, they would undermine recovery and tip the economy back into stag-deflation (recession and deflation).” Another risk is the rising price of energy and food—the global economy would be shaken if oil again rocketed toward $100 a barrel, he writes. Roubini predicts that, even if the double-dip recession can be avoided, the path back to a stable economy will actually be “anemic and below trend for at least a couple of years...a weak U-shaped recovery.”