Nouriel Roubini: Trade wars are a negative sum game

Nouriel Roubini, professor of economics at New York University’s Stern School of Business and chairman of Roubini Macro Associates.

“Trade war is not a zero sum game, it is a negative sum game,” Nouriel Roubini tells Bloomberg. In other words, “everybody is a loser”. The latest threat to global trade has already pushed US stocks down and pushed up US government borrowing costs. There’s a good reason for that – escalating trade tensions between the world’s biggest economies could damage the American economy, says Roubini. “Discipline is going to eventually come from the markets… We’ve already seen how this rise of trade tension has led to a significant market correction.”

Roubini isn’t just bearish on stocks. In February he told Bloomberg that cryptocurrency bitcoin is “the biggest bubble in human history” – and this “mother of all bubbles” is finally crashing (the cryptocurrency had at that point slid by $8,000, a 60% plunge from its peak in December, and it is still falling now – see page 36). Bitcoin is just the start. There are at least 1,300 cryptocurrencies in existence, and “most of them are even worse” than bitcoin, reckons Roubini.

Unlike many pundits, he doesn’t rate the technology underpinning bitcoin – the blockchain – much either, describing it on Project Syndicate recently as “one of the most overhyped technologies ever”. However, it may make sense “in cases where the speed/verifiability trade-off is actually worth it”, he noted.