Nouriel Roubini, one of the few economists who predicted the 2007-2009 financial crisis, is repeating his warnings for a greater crisis in the 2020s. According to Roubini after the previous crisis, the imbalances and risks of the global economy deepened by policy mistakes. Rather than addressing the structural problems which the financial collapse and the recession revealed, governments delayed the issue, creating major downside risks that made another crisis inevitable. He grounds his analysis on 10 trends already present before the Coronovirus (Covid-19) pandemic outbreak, now fueled to a perfect storm which might sweep the entire global economy into a decade of despair.

1. Deficits, their corollary risks and loss of income for many households and firms, deepend by the Covid-19 crisis.

2. The necessity of public spending on healthcare, revealed by the Covid-19 pandemic.

3. Growing risk of deflation increasing the risk of insolvency.

4. Currency debasement as central banks try to fight deflation, leading to accelerated and renewed protectionism.

5. Broader digital disruption of the economy with millions of people losing their jobs or working for less.

6. Deglobalisation accelerated by the pandemic, causing tighter restrictions on the movement of goods, services, capital, labour, technology and information all over the world.

7. Populist leaders benefiting from economic weakness, mass unemployment and rising inequality.

8. The geostrategic standoff between the US and China with the Trump administration making every effort to blame China for the pandemic.

9. Stage for a new cold war between the US and its rivals.

10. Environmental disruption which has proved to create far more economic destruction than a financial crisis.

Roubini believes that even if the recession leads to a U-shaped recovery this year, an L-shaped “Greater Depression” in inevitable to follow later in this decade. 

Click here to read his entire article on The Guardian.