Inevitable “Greater Depression”? Project Syndicate

Tackling problems swiftly, well in advance, tends to produce better results than waiting for crisis. After the 2007-08 crisis, governments failed to address imbalances and other structural problems. Nouriel Roubini, writing for Project Syndicate, anticipates a lingering depression throughout the decade due to economic risks long in play combined with an uneven pandemic response. He identifies 10 risks including unsustainable deficits and defaults combined with loss of income; aging populations in advanced economies and need to invest in health care systems; reduced demand with price collapses and deflation; unconventional monetary policies and currency debasement; broadening digital disruption and automation, with increased more inequality and populism; deglobalization and protectionism; increased China-US decoupling and tensions; and a new cold war, accompanied by cyber warfare. “A final risk that cannot be ignored is environmental disruption, which, as the Covid-19 crisis has shown, can wreak far more economic havoc than a financial crisis,” Roubani concludes. “Pandemics and the many morbid symptoms of climate change will become more frequent, severe, and costly in the years ahead.” The challenges require technological know-how, competent political leadership and stable international order. – YaleGlobal