Great Recession or Greater Depression? – Dr. Nouriel Roubini on The Interview

The Economic Context of Coronavirus

Renowned economist Dr. Nouriel Roubini sees storm clouds gathering ahead for the U.S. and global economies — but just how bad might it get? Dr. Roubini joins Real Vision’s Ash Bennington to unpack the broader macroeconomic and market framework. Roubini describes the broader context of the recent selloff in U.S. stocks: an equity bubble, excessive debt and leverage, and susceptibility to an external macroeconomic shock. Real Vision’s Ash Bennington hosts this highly engaging conversation that sets the stage for the crisis to come.

The Slow-Motion Train Wreck

Dr. Nouriel Roubini unpacks the “slow motion train wreck” sees barreling toward the global economy and compares the events we see unfolding now to the Global Financial Crisis of 2007-08 and the Great Depression of the 1930s. Roubini joins Real Vision’s Ash Bennington to discuss the underlying dynamics of the crisis. In this episode, Roubini and Bennington discuss rising credit spreads, negative economic growth, a skyrocketing unemployment rate, and an overall environment that Roubini describes as “like an asteroid literally hitting planet earth and stopping economic activity everywhere.”

MMT & The Crisis Response to Coronavirus

Has Modern Monetary Theory  (MMT)— once an idea popular only among leftwing academic economists — gone mainstream? Dr. Nouriel Roubini believes that MMT has now finally crossed into the mainstream. Against a backdrop of a plunging economic activity, recession, deflation, and collapse of the velocity of money, MMT may offer a ray of hope where other policies have failed. Roubini also unpacks the specific mechanisms by which The Federal and U.S. Treasury might coordinate their policy actions to attempt to moderate this recession. 

Three Pillars of the Coronavirus Apocalypse

Dr. Nouriel Roubini discusses what he regards as the three pillars of the coronavirus crisis. Specifically, Dr. Roubini provides his views on what he believes to have been a failed health response, which he argues raises the probability of a recurrent outbreak of the virus in the winter of 2020. Second, Roubini details how a continued economic decline could necessitate additional, large scale fiscal stimulus in the U.S., increasing the risk of inflation and stagflation. Finally, he spells out the case for a rising backdrop of geopolitical risk, including escalating cybersecurity threats, potential civil unrest in the United States, and the possibility of a war between the U.S. and Iran.

The Debt Bubble

Has coronavirus struck the United States and its economy during a debt bubble? Famed economist Dr. Nouriel Roubini explains how pockets of leverage have been lurking beneath the surface in the U.S. corporate sector. In this episode, Roubini discusses the shadow banking system, collateralized mortgage obligations, junk bonds, leveraged loans, covenant light debt, investment grade bonds that have become ‘fallen angels,’ and the general decline of credit standards that he believes has led to system-wide toxicity. 

The Monetary Policy Response to Coronavirus

In this final episode of Real Vision’s interview with renowned economist Dr. Nouriel Roubini, we take a detailed tour of the ‘alphabet soup’ of U.S. monetary policy. Dr. Roubini unpacks the stresses in the financial systems during crises, the flight to quality trade that occurs under crisis pressures, and explains and the technical challenges of liquidity preferences in markets. Roubini also explains the risks caused by the unwind of the so-called ‘risk parity trade’ requently employed by hedge funds, which occurs when historical patterns of asset correlations breakdown.