Tags: Nouriel | Roubini | Fiscal | Deficits

Roubini: Runaway Fiscal Deficits Worry Me

Friday, 19 Mar 2010 02:18 PM

The United States avoided collapsing into another Great Depression through massive monetary and financial stimulus packages but must now deal with worrying “runaway fiscal deficits,” says New York University economist Nouriel Roubini.

Republicans and Democrats in Congress are at odds on how to deal with deficits, with the former against raising taxes and the latter against certain spending cuts, which is not good for the U.S. economy, Roubini says.

“If we cannot raise taxes or cut spending, the path of least resistance is going to be running the printing presses,” Roubini tells CNBC.

Stock markets, meanwhile, are destined for volatility soon, as withdrawing stimulus money from the economy could push the country back into recession while leaving the money in place could widen deficits even further.

Exit policies pose a “damned if you do, damned if you don't” dilemma, Roubini says.

Lawmakers are debating ways to reform the financial system, and Senate Banking Committee Chairman Christopher Dodd says Congress should not adjourn for its two-week Easter recess on March 26 without addressing financial reform, Reuters reports.

“We really can't allow this Congress to adjourn without addressing these basic issues,” says Dodd.

Republicans do not like new regulations outlined in Dodd's bill while Democrats say the legislation doesn't go far enough to protect the public from financial crises.

For Dodd, that's a good thing.

“We're on the right track here if we're being badgered by both sides,” says Dodd. “We think we're on the right track and the public really wants us to address these issues and they deserve an answer.”

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The United States avoided collapsing into another Great Depression through massive monetary and financial stimulus packages but must now deal with worrying runaway fiscal deficits, says New York University economist Nouriel Roubini. Republicans and Democrats in Congress...
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2010-18-19
 

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