Global Economic Crisis

He was dubbed “Dr. Doom”  for his uncanny and highly accurate prediction of the 2008 global financial crisis and global recession. Now, Roubini is again making dire predictions of a catastrophic global economic recession. This time, however, the decisive driver of the meltdown won’t be subprime mortgages but rather the increasingly tense relationship between the two largest economies in the world – America and China.

In an article for Project Syndicate entitled, ” The Coming Sino-American Bust Up,” the noted economist  writes,  “Whether or not US President Donald Trump and his Chinese counterpart, Xi Jinping, agree to another truce at the upcoming G20 summit in Osaka, the Sino-American conflict has already entered a dangerous new phase. Though a negotiated settlement or a managed continuation of the status quo are possible, a sharp escalation is now the most likely scenario.“

Roubini sees a global recession occurring as soon as 2020, a predictions that other economists have also prognosticated on. With the previous global economic crisis of 2008 having consumed all the policy perceptions that central  banks and sovereign fiscal stimulus had available for decision makers, the coming global economic recession will find policy makers with  few silver billets remaining. In the meantime, nationalism may replace rational economics in determining the course of the next recession, which Nouriel Roubini believes will be largely determined by the increasingly strife-ridden relationship between the United States and China.

Sheldon Filger-blogger for GlobalEconomicCrisis.com

The introductory summit meeting between Chinese president Xi Jinping and President Donald Trump at the latter’s estate in Mar-a-Lago, Florida will ultimately have the most significant implications for the global economy. If Trump sticks to his campaign rhetoric, China and the United States are headed for a trade war, with dire effect for those two countries and the entire world economy. The atmospherics that  emerged at Mar-a-Lago, give cause for cautious optimism.

Undoubtedly, Trump and his Chinese counterpart know the risks of a full-fledged trade war between the two largest economies on the planet. The positive atmosphere that emerged from the summit points to a recognition that hard bargaining is pending, but ultimately a stable bilateral economic relationship between Washington and Beijing is in everyone’s best interests.

The wild card will be if external issues, particularly North Korea’s nuclear  and ballistic missile program, as well as Chinese assertiveness in the South China Sea, will undercut rational economic calculations.