The Latest from Dr. Doom

Saturday, October 30th, 2010

Never heard of him? No, I don’t mean Dr. Demento. “Dr. Doom” is the monniker borne (probably proudly) by NYU economics professor Nouriel Roubini, famous for foreseeing – among other things – the gigantic collapse in the US housing market beginning in 2007 that kicked off this worldwide Great Recession. Back then Roubini kept adding to his fame by forecasting further disastrous developments in one aspect of national or international economic performance after another; people would never believe him that things could get that bad, yet most times events proved him to be spot-on.

Now he has further comments which he contributed to the Financial Times. Unfortunately, that paper has a rather restrictive readership policy – i.e. it likes to force you to pay – but luckily we can resort to Denmark’s business newspaper Børsen instead. There it’s a brief piece, and Roubini’s message is clear, simple, and expressed in the title: The catastrophe commences on Tuesday.

Tuesday? That’s election day in the USA, of course, and according to Roubini that will unleash a new economic crisis because the Republicans are expected to make significant gains, recapturing control of the House of Representatives and maybe the US Senate as well. This will inaugurate paralysis in Congress as Democrats and Republicans block everything the other side tries to do, even as the US economic situation remains dire and in need of fiscal initiatives of one sort or another.

True, this insight is hardly blindingly original, and it has also certainly been advanced recently by other commentators, and then even rather more eloquently. (“In fact, future historians will probably look back at the 2010 election as a catastrophe for America, one that condemned the nation to years of political chaos and economic weakness.”)

Then again, everyone knows that Paul Krugman is a liberal (Nobel Prize-bearing) attack-dog. But this is the FT, BørsenDr. Doom, no less!

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