The global economy may face more crises, Dr Doom warns

Professor Roubini, a famous economist at New York University, who is known as Dr. Doom, said September 27 that the global economy could face more crises in the next decade, and that financial regulation reform and QE would not help much. He argues that the US Congress's move to pass the financial regulatory Reform bill is "too late and weak", and that further quantitative easing by the Fed will not help a market already awash in excess liquidity.　　He judged that, at some point, asset bubbles and credit bubbles were or have taken place in some parts of the world, such as emerging markets, in the context of the current loose monetary interest rate. Even if the global economy is not mired in a double-dip recession, the market can still feel the effects of economic weakness, according to Roubini, and investors feel very much like the downturn.　　If the market is surprised by the adverse economic data news, the stock market will adjust, spreads will expand, volatility will increase, risk aversion increased, which will bring the real economy shocks. Roubini is likely to see a relapse into recession, with the U.S. second-quarter gross domestic product revision likely to be lowered. The second half of 2010 will be worse off than in the first half, as austerity measures are a drag on economic growth. He believes the U.S. economy will present a "anaemic recovery" and cannot rule out the possibility of a two recession. (Yang Bo)