Nouriel Roubini, described by Bloomberg as a "renowned doomsayer", is concerned that we are heading for a global recession next year. The New York University economics professor is perhaps best known for his warnings about the precarious state of the US housing market prior to the financial crisis of 2008.
Central banks will, of course, react, which is one factor helping to prop up markets investors already expect the Federal Reserve to cut interest rates later this month. Yet as Roubini points out, during the 2008 crisis the Fed was cutting interest rates from a much higher level, and still couldn't prevent the recession. With key interest rates still at or near record lows around the world, and levels of debt very high, monetary policy alone cannot keep the party going. Throw in the risk of an oil-price shock, and we could end up with 1970s-style stagflation, with rising prices combined with slower growth.
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