About Dr. Nouriel Roubini
Nouriel Roubini is probably the most prominent and prescient economist who predicted the current economic crisis. As early as 2006, Roubini predicted that the United States “was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession.”
Roubini nicknamed Dr. Doom and lately Dr. Realist by CNBC , is a professor of economics at the Stern School of Business, New York University and chairman of RGE Roubini Global Economics, an economic consultancy firm .
Prof. Nouriel Roubini A world-class economist who offers an unflinching look at the global meltdown and distinctive insights into its course going forward. His research on financial crisis in emerging economics has yielded a unique and now vindicated approach to future collapses. Roubini speaks on the global economic outlook and its implications for the financial markets. From his analysis of past collapses of emerging economies, he has identified common factors that support his predictions of crisis in the US and world markets. He has held several high-level advisory positions in the US government and international finance organisations, published numerous policy papers and books on key international macro-economic issues.
Nouriel Roubini was born into a relatively orthodox Jewish family in Iran, lived in Israel and Turkey, and then moved to Italy as a child. By the age of six, instead of going to a yeshiva, he went to a secular Jewish school where he interacted with kids from all sorts of different backgrounds.
Roubini himself was born in 1958, not in Mashad, but in Istanbul, where his parents had a short layover before moving on to Tehran, Tel Aviv, and, finally, Milan, where the family set up its Oriental rug business and lives to this day.
Because they arrived in Italy when they were young, Nouriel and his two brothers, born one after the other in the span of 21 months, were able to duck right into Italian society (though they spoke Farsi at home) and, in the typical way of first-generation immigrant children, disappear.
The Roubini boys came to immerse themselves in politics during the 1970s, when Italy was rocked by social unrest and domestic terrorism; according to his youngest brother David, Nouriel began leading student assemblies on the events of the day. “I was like everybody else, the son of a good upper-middle-class family, and like many of my generation, I was socially conscious,” Roubini says. “I wanted to make the world a better world. And, probably, my interest in economics came from my interest in politics.”
Roubini is an economics professor at NYU’s Stern School of Business. He also runs his own consulting firm, Roubini Global Economics, and maintains a blog of his own, Nouriel Roubini’s Global EconoMonitor.
More significantly, Roubini is probably the most prominent and prescient economist who predicted the current economic crisis. As early as 2006, Roubini predicted that the United States “was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession.”
Born in Turkey to a family of Iranian Jews, Roubini spent a few years in Tehran, Iran and Tel Aviv, Israel before his family settled in Milan, Italy when he was five years old. He has degrees from Bocconi University, in Milan, and Harvard, has taught at Yale, and has previously worked with the IMF (International Monetary Fund), the World Bank, the White House Council of Economic Advisors, and the United States Treasury Department (under President Clinton).
According to Kunkel, Roubini thinks the U.S. economy “is still limping from what he likes to call a hard landing” — a fall from which you don’t bounce right back up.” Roubini expects that the economy will grow at approximately 1.5% — less than half its historical rate — thanks, in part, to government stimulus.
Kunkel quotes Roubini: If you ask about the medium term, actually, I think the opportunities for global growth on a sustained basis are quite positive. Right now the basic building block of global demand, the U.S. consumer, is faltering; therefore, there’s a lack of aggregate demand relative to supply. The supply has been rising because China and emerging markets have been investing so much in new factories and new productive capacity. A lack of demand relative to excess supply — that’s what the global recession is.”
Roubini calls for a complete rebalancing of the global economy, with the U.S. and Europe saving more and other countries, such as China, Japan, and Germany, spending more.
For the U.S., he predicts tight credit, high unemployment, and possibly even the return of stagflation a la the 1970s, depending on the relationship between oil prices and overall growth. In early 2007, Roubini said “a strong rebound is unlikely,”
Despite the Dow’s recent return to 10,000, Roubini remains uncertain about the future: The key issue is not whether the recession is over today or in three months but whether over the medium term growth is going to be robust or anemic, or even whether there’s a risk of a double-dip recession. And I believe the recovery is going to be anemic.
Why an anemic recovery? He points to the fact that banks are still unwilling to lend; that U.S. households are still in debt and out of work, and that corporations are still cutting costs, rather than increasing revenue.
Nouriel Roubini (born 29 March 1959) is an American professor of economics at New York University's Stern School of Business and chairman of Roubini Global Economics, an economic consultancy firm.
After receiving a BA in political economics at Bocconi University, Milan, Italy and a doctorate in international economics at Harvard University, Cambridge, Massachusetts, he began academic research and policy making by teaching at Yale while also spending time at the International Monetary Fund (IMF), the Federal Reserve, World Bank, and Bank of Israel. Much of his early studies focused on emerging markets. During the administration of President Bill Clinton, he was a senior economist for the Council of Economic Advisers, later moving to the United States Treasury Department as a senior adviser to Timothy Geithner, who is now Treasury Secretary.
In 2008, Fortune magazine wrote, "In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage".
The New York Times notes that he foresaw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt".
In September 2006, he warned a skeptical IMF that "the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession". Nobel laureate Paul Krugman adds that his once "seemingly outlandish" predictions have been matched "or even exceeded by reality."
As Roubini's descriptions of the current economic crisis have proven to be accurate, he is today a major figure in the U.S. and international debate about the economy, and spends much of his time shuttling between meetings with central bank governors and finance ministers in Europe and Asia.
He was #4 on Foreign Policy magazine's list of the "top 100 global thinkers." He has appeared before Congress, the Council on Foreign Relations, and the World Economic Forum at Davos.
Early life and education
Nouriel Roubini was born in Istanbul, Turkey, to Iranian Jewish parents. When he was age two, his family moved to Tehran, Iran, and later he lived in Israel. From 1962 to 1983 he resided in Italy where he attended Bocconi University in Milan, and then he moved to the United States to pursue his business doctorate in international economics at Harvard University. He is a U.S. citizen and he speaks English, Persian, Italian, and Hebrew. He lives in Manhattan, has never married, and is "well-known on the New York club circuit".
Roubini spent one year at the Hebrew University of Jerusalem before moving to Milan, Italy, where he received his B.A., summa cum laude, in economics from the Bocconi University in 1982. He received his Ph.D. in international economics from Harvard University in 1988. According to his academic adviser, Jeffrey Sachs, he was unusual in his talent with both mathematics and intuitive understanding of economic institutions.
In an interview in June 2009, when asked about his best investment in life, he replied, "I think investing in a good education has been key for me, although the investment was more in time than money."
For much of the 1990s, Roubini combined academic research and policy making by teaching at Yale and then in New York, while also spending time at the International Monetary Fund, the Federal Reserve, World Bank, and Bank of Israel.
Currently, he is a professor at the Stern School of Business at New York University. He spent much of his time working on emerging market blowouts in Asia and Latin America; doing so helped him spot the looming disaster in the U.S. "I’ve been studying emerging markets for 20 years, and saw the same signs in the U.S. that I saw in them, which was that we were in a massive credit bubble," he said.
By 1998, he joined the Clinton administration first as a senior economist in the White House Council of Economic Advisers and then moved to the Treasury department as a senior adviser to Timothy Geithner, then the undersecretary for international affairs and now Treasury secretary in the Obama administration. Roubini returned to the IMF in 2001 as a visiting scholar while it battled a financial meltdown in Argentina. He co-wrote a book on saving bankrupt economies entitled Bailouts or Bail-ins? and opened his own consulting firm.
He credits a number of economists for his understanding of economics. He said, "One person who has had a great impact on me intellectually was my adviser at Harvard, Jeffrey Sachs. For me he’s the model of a great intellectual. He is both a rigorous academic and very human, involved in big picture issues such as poverty, AIDS, and Africa. He’s someone with a great mind that is also very engaged with the world. Another intellectual hero is Larry Summers, the former President of Harvard, an amazing intellectual and academic, who is very deeply involved with the policy world. I worked for him for many years in the US Treasury during the Clinton Administration".
He likes to refer to himself as a "global nomad", and says, "You can be sitting still surfing the Internet, and experience other worlds, ideas and societies. But I’ve found that there is nothing better than visiting a different country, even if for three days. ... you can’t only be a virtual Global Nomad, with goggles on, in a virtual reality. You have to be there. You have to see it, smell it and live it. You have to see people, travel, and interact."
Partly to fulfill this need, he became chairman of RGE, an economic consultancy for financial analysis. In describing the purpose of RGE Monitor, he said, "the world is my home, so everything about society and culture—no matter how miniscule—is worth knowing.
I am an information junkie and created RGE Monitor to collect information about what’s happening around the world."
Speaking of his early influences, Roubini said, "I was born into a relatively orthodox Jewish family in Iran, lived in Israel and Turkey, and then moved to Italy as a child. By the age of six, instead of going to a yeshiva, I went to a secular Jewish school where I interacted with kids from all sorts of different backgrounds. Had I gone to an orthodox Jewish school, I would perhaps be orthodox now and may have never become a Global Nomad."
During an interview in June 2009, he was asked about his personal lifestyle expenses and other investments. He said, "I regularly save about 30% of my income. Apart from my mortgage, I don’t have any other debts. The credit crunch hasn’t affected me much. . . . I’ve always lived within my means and, luckily, have never been out of work. I would say I’m a frugal person—I don’t have very expensive tastes. . . . You don’t need to spend a lot to enjoy things."
Asked whether he invests in stocks, he replied, "Not as much these days. I used to have a lot in equities—about 75%—but over the past three years, I’ve had about 95% in cash and 5% in equities. You’re not getting much from savings these days but earning 0% is better than losing 50%. . . . I don’t believe in picking individual stocks or assets. . . . Never invest your money as though you are gambling at the casino. Buying and selling individual stocks is a waste of time."
In the 1990s, Roubini studied the collapse of emerging economies. He used an intuitive, historical approach backed up by an understanding of theoretical models to analyze these countries and came to the conclusion that a common denominator was the large current account deficits financed by loans from abroad. Roubini theorized that the United States might be the next to suffer, and as early as 2004 began writing about a possible future collapse. Business Week magazine writer Michael Mandel, however, noted in 2006 that Roubini and other economists often make general predictions which could happen over multi-year periods.
In September 2006, he saw the end of the real estate bubble: "When supply increases, prices fall: That’s been the trend for 110 years, since 1890. But since 1997, real home prices have increased by about 90 percent. There is no economic fundamental—real income, migration, interest rates, demographics—that can explain this. It means there was a speculative bubble. And now that bubble is bursting." In the Spring 2006 issue of International Finance, he wrote an article titled "Why Central Banks Should Burst Bubbles" in which he argued that central banks should take action against asset bubbles. When asked whether the real estate ride was over, he said, "Not only is it over, it’s going to be a nasty fall."
By May 2009, he felt that analysts expecting the U.S. economy to rebound in the third and fourth quarter were "too optimistic." He stated, "Certainly the rate of economic contraction is slowing down from the freefall of the last two quarters." He expects negative growth to the end of 2009, and feels that during 2010 the recovery is still going to be weak," with the full recession lasting 24 or 36 months, and a possibility of an "L-shaped" slow recovery that Japan went through in The Lost Decade. But in fact, the US economy started to grow in mid 2009 just like the optimistic analysts forecasted.
In his opinion, much of the current recession's cause is due to "boom-and-bust cycles," and feels the U.S. economy needs to find a different growth path in the future. "We’ve been growing through a period of time of repeated big bubbles," he said. "We’ve had a model of 'growth' based on overconsumption and lack of savings. And now that model has broken down because we borrowed too much." He feels that too much human capital went into financing the "most unproductive form of capital, meaning housing" and would like to see America create a model of growth in more-productive activities.
He feels that "sustainable growth may mean investing slowly in infrastructures for the future, and rebuilding our human capital," by investing in renewable resources. "We don’t know what it’s going to be," he says, "but it’s going to be a challenge to find a new growth model. It’s not going to be simple."
Recovery from recession
In August 2009, Roubini predicted that the global economy will begin recovering near the end of 2009, but the U.S. economy is likely to grow only about 1 percent annually during the next two years, which is less than the 3 percent normal "trend." He notes that the Fed is "now embarked on a policy in which they are in effect directly monetizing about half of the budget deficit," but that as of now "monetization is not inflationary," as banks are holding much of the money themselves and not relending it.
At some point, however, probably by 2011, he sees the recession ending, and "banks will want to lend the money; people and businesses will want to borrow and spend it." Then it will be time for an "exit strategy, of mopping up that liquidity" and taking some of the money back out of circulation, "so it doesn’t just bid up house prices and stock values in a new bubble.
And that will be 'very, very tricky indeed,'" he states. However this prediction proved to be wrong when the US economy grew 2.2% in the third quarter of 2009, and contracted only 0.7% in the second quarter of 2009, showing that the economy is recovering earlier and much more robustly than Roubini expected.
Also, in late July, he warned that if no clear exit strategy is outlined and implemented, there was the potential of a perfect storm: fiscal deficits, rising bond yields, higher oil prices, weak profits, and a stagnant labor market, which combined could "blow the recovering world economy back into a double-dip recession."
As of January 2009, he remained pessimistic about the U.S. and global economy. He said in September, 2008, "we have a subprime financial system, not a subprime mortgage market". "As the U.S. economy shrinks, the entire global economy will go into recession. In Europe, Canada, Japan, and the other advanced economies, it will be severe. Nor will emerging market economies—linked to the developed world by trade in goods, finance, and currency—escape real pain."He was quoted in South Africa's 2009 budget speech for his role in predicting the current financial crisis in the developed markets.
Roubini notes that the subprime issues are a global, and not just a U.S. problem. In an interview with author James Fallows in late spring of 2009, he stated, "People talk about the American subprime problem, but there were housing bubbles in the U.K., in Spain, in Ireland, in Iceland, in a large part of emerging Europe, like the Baltics all the way to Hungary and the Balkans. It was not just the U.S., and not just 'subprime.' It was excesses that led to the risk of a tipping point in many different economies."
His pessimism is focused on the short-run rather than the medium or long-run.] In Foreign Policy (Jan/Feb 2009), he writes, "Last year’s worst-case scenarios came true. The global financial pandemic that I and others had warned about is now upon us. But we are still only in the early stages of this crisis. My predictions for the coming year, unfortunately, are even more dire: The bubbles, and there were many, have only begun to burst".
At a conference in Dubai in January, 2009, he said, the U.S. banking system was "effectively insolvent." He added that the "systemic banking crisis.... The problems of Citi, Bank of America and others suggest the system is bankrupt. In Europe, it’s the same thing." To deal with this problem, he recommends that the U.S. government "do triage between banks that are illiquid and undercapitalized but solvent, and those that are insolvent. The insolvent ones you have to shut down." He adds, "We're in a war economy. You need command-economy allocation of credit to the real economy. Not enough is being done," he felt at the time.
In 2010, he again warned that despite an improved economy with rising stock markets, the crisis was not over and new bubbles were on the horizon: We are just at the next stage. This is where we move from a private to a public debt problem . . . We socialised part of the private losses by bailing out financial institutions and providing fiscal stimulus to avoid the great recession from turning into a depression. But rising public debt is never a free lunch, eventually you have to pay for it.
In late May 2010, markets around the world began dropping due partly to problems in Greece and the Eurozone. "Roubini believes Greece will prove to be just the first of a series of countries standing on the brink," writes the Telegraph. Roubini explains the new issues governments must deal with: We have to start to worry about the solvency of governments. What is happening today in Greece is the tip of the iceberg of rising sovereign debt problems in the eurozone, in the UK, in Japan and in the US. This... is going to be the next issue in the global financial crisis.
Roubini met officials in China during spring 2009, and points out that many Chinese commentators blame American "overborrowing and excess" for dragging them into a recession. However, he states that "even they realize that the very excess of American demand has created a market for Chinese exports." He adds that although Chinese leaders "would love to be less dependent on American customers and hate having so many of their nation’s foreign assets tied up in U.S. dollars," they’re now "more worried about keeping Chinese exporters in business. . . . I don’t think even the Chinese authorities have fully internalized the contradictions of their position." Writings
Roubini is the author of several books, including: Crisis Economics: A Crash Course in the Future of Finance,Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies, Political Cycles and the Macroeconomy, and New International Financial Architecture. Research
Roubini's research interests include:
- international macroeconomics and international finance;
- macroeconomics and fiscal policy;
- political economy;
- growth theory;
- European monetary issues.
- Current appointments
- Research Fellow, National Bureau of Economic Research
- Research Fellow, Centre for Economic Policy Research, London, UK
- Member, Bretton Woods Committee
- Member, Council on Foreign Relations Roundtable on the International Economy
- Member, Academic Advisory Committee, Fiscal Affairs Department, International Monetary Fund