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Speaking at the Milken Institute’s Global Conference in Beverly Hills, Calif., Roubini noted that real wages for U.S. workers are not growing and that America’s crushing debt is strangling growth. That translates into possible fiscal decay in which GDP will be “lucky” to grow 2% this year and faces the prospect of retreating into near-zero growth next year, according to Roubini.
Both political parties can share blame for the trouble, he added, arguing that the Republican Party wants to limit spending and Democrats don’t want to cut programs, and so are at an impasse. Little is likely to change regardless of this year’s presidential election, as Senate Democrats are likely to use the filibuster even if Republican candidate Mitt Romney unseats President Barack Obama.
“If there is gridlock, it’s going to get worse,” Roubini said.
Change will have to come in several forms, including higher taxes for all — not just the rich — and the nation’s entitlement programs will need to be reformed, he commented.
Roubini, noted for his dire predictions, won extensive praise after correctly predicting the housing-market crash and recession of 2008-09. Host Michael Milken, and Roubini himself, made light of the economist’s well-known pessimism at the conference.
His caustic humor came to light when discussing the ongoing economic crisis in Europe, as well as the Greek debt debacle. “They’ve had a big fat Greek wedding for the last 20 or 30 years,” Roubini said of the troubled nation.
On a more serious note, he pointed out several scenarios that could wreak further global economic havoc, including further conflicts between the United States and Iran, or Israel and Iran. But it may not be limited to just that, as a whole host of issues could make life difficult in the region.
“The entire Middle East is really a mess,” Roubini said. “This Arab spring is going to become an Arab winter.”
Milken said that vast U.S. shale deposits could lessen the nation’s reliance on Mideast oil within several years, but Roubini was skeptical it could be done anytime soon.
Getting motorists to convert to natural gas-burning cars will take years, meaning that becoming energy independent could take up to three decades with no viable national energy policy.
“Where is the leadership?” Roubini asked.
Expect stagnant U.S. economy in 2013: Roubini - MarketWatch
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