Roubini, many other economists,scholars

Roubini's ray of hope
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Nouriel Roubini, the economist who called the global financial crisis three years ago, is now talking about light at the end of the tunnel.

He is positive about measures taken by the Obama administration to restore confidence in the US banks and financial system. He says that while many details, flaws and shortcomings remain to be resolved, the risks of an L-shaped near-depression have been reduced.

Roubini, who prefers the tag Dr Realist to Dr Doom, is now more positive on the US economy than organisations that were out of step with him in 2006 when he was warning of the dangers of the sub-prime housing bubble.

He says the US will grow by 0.5 to 1 per cent in 2010 whereas the OECD says the US economy will not grow at all next year. However, he says US private sector economists calling a recovery later this year are wrong.

Roubini has been included in Time magazine's list of the 100 most influential people, which includes an eclectic mix of politicians, celebrities, businessmen and women as well as Ponzi master Bernie Madoff.

Nobel Prize winning economist Paul Krugman wrote the Time comment on Roubini. Krugman says Roubini is not just a Chicken Little who got lucky when the sky fell in. He says his forecasts are based on sophisticated modelling and careful data analysis.

Roubini responded to the Time magazine accolade with a reminder that he simply connected the dots laid out by many other economists, scholars and others.

Among those he praised were Robert Shiller, Kenneth Rogoff, Raghu Rajan, Nassim Taleb, Krugman, Stephen Roach, David Rosenberg, Niall Ferguson, Hyun Shin, William White, Hyman Minsky and Gillian Tett.

In his blog Roubini says the world is still in a severe and protracted U-shaped recession.

He says there are significant downside risks.

In other recent interviews Roubini has forecast that Europe and Japan will not come out of recession until the end of 2010 and that China will grow by 5 per cent this year and 7 per cent next year.

Roubini's optimism is founded on three positive developments: the $US800 billion fiscal stimulus; the US housing plan that slows down defaults and foreclosures; and the Geithner plan for bank stress-testing and resolving bad assets.

He also upbeat about the zero interest rate policies being pursued in the developed world.