Tags: Roubini | 1914 | Japan | China

Roubini Raises Ominous Comparisons With 1914

By Dan Weil   |   Thursday, 23 Jan 2014 11:36 AM

New York University economist Nouriel Roubini, who recently has voiced some expression of optimism — at least when it comes to the world economy — has apparently returned to pessimistic mode.

In two postings on Twitter, he cited similarities between now and 1914, when World War I broke out.

Writing from the World Economic Forum in Davos, Switzerland, Roubini said in one tweet: "many speakers compare 2014 to 1914 when WWI broke out & no one expected it. A black swan in the form of a war between China & Japan?"

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And the second tweet read: "Echoes of 1914: backlash against globalization, gilded age of inequality, rising geopolitical tensions, ignoring tail risks."

CNBC reported that Japan's Prime Minister Shinzo Abe has expressed concern over his country's tension with China.

Abe said Wednesday that China and Japan are in a "similar situation" to that of Britain and Germany before World War I, according to news reports, though Abe's top spokesman denied he meant war is coming.

As for the "gilded age of inequality" mentioned by Roubini, many policymakers and scholars in the United States are concerned about the growing inequality of income.

To be sure, former Assistant Defense Secretary Joseph Nye, now a Harvard professor, cited important differences between now and 1914.

"One is that nuclear weapons give political leaders the equivalent of a crystal ball that shows what their world would look like after escalation," he wrote in an article for Project Syndicate.

"Another difference is that the ideology of war is much weaker nowadays."

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