He is one of the few to have seen the 2008 crisis coming. Sometimes nicknamed “Doctor Catastrophe” because of his very gloomy forecasts, Nouriel Roubini, professor of economics at the Stern School of Business at New York University , published a new book (Megamenaces, Buchet-Chastel, 384 pages, 23.50 euros), where he identifies the risks that our economies will face in 2023 and beyond. Starting with that of a financial crisis.
You are one of the few to have seen the 2008 crisis coming. Is the situation today comparable?
Hard to say, because we face a series of risks with different time horizons. In the short term, there are those related to the war in Ukraine, of course, to inflation and to the specter of a financial crisis which could arise in the next few months or in the next two or three years. Added to this are the “mega-threats” likely to materialize more or less severely in the long term, and which do not only concern the economy.
Starting with climate change which, if we do not control it, could lead to the destruction of the planet, geopolitical tensions which could degenerate into nuclear war between great powers, and socio-political instability – everywhere we are witnessing a return baton against liberal democracies.
How far can the recession caused by the energy crisis go?
On the subject, the general consensus – that of political decision-makers, Wall Street and central banks – has been wrong for a year and a half. The latter have long claimed that the inflationary pressures we are seeing are temporary. However, it is not the case. Then they said: we will raise key rates and calm inflation, with a soft landing for the economy. This is also incorrect: evidenced by the United Kingdom, on the verge of stagflation with very high inflation.
I think the landing will not be soft but harsh, and associated with financial stress. Raising interest rates while the economy is losing momentum, with an overall level of debt much higher than in the 1970s, could cause a collapse in stock and bond markets, which could deepen the recession.
Following the adoption of the Inflation Reduction Act (IRA), across the Atlantic, very unfavorable to European industry, do you fear a trade war between the United States and the Old Continent?
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