Too Big to Fail, Too Big to Bail Out: Roubini

Nouriel Roubini

European governments face the quandary of being unable to afford to bail out banks that are still considered too big to fail, while the global economy is heading for a slowdown in the second half of the year, economist Nouriel Roubini of Roubini Global Economics recently stated that European governments are in big trouble. On the one hand they cannot bail out all their banks, on the other hand these banks are too big to fail. Roubini stated “Everything signals a slowdown of the US, a slowdown of Europe, a slowdown of Japan and a slowdown of China,”. Roubini predicts zero growth in Japan and the Euro Zone, 1.5% growth in the US, and 7% growth in China.

Governments are running out of ways to counter a “massive slowdown” or the risk of a double-dip recession, Roubini said.

“A year ago we had all these policy bullets,” he said. “We could push down rates to zero, we had (quantitative easing), we could do a budget deficit of 10 percent of GDP (or) backstop the financial system.”

Roubini notes that the job numbers are not encouraging in the US, and “Everything signals a slowdown of the US, a slowdown of Europe, a slowdown of Japan and a slowdown of China” .

“Everything signals a slowdown of the US, a slowdown of Europe, a slowdown of Japan and a slowdown of China,” he said.

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