Nouriel Roubini is a glass half empty guy, and an impressive one at that, with a CV that sports senior advisor positions at the White House Council of Economic Advisers, Treasury Department, IMF, Federal Reserve, World Bank, and Bank of Israel, as well as academic appointments at Yale and NYU.
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His dour forecasting stood him in especially good stead during the run up to the 2007–2009 global financial crisis (GFC), which he diagnosed as the inevitable outcome of a real estate market brought to a rolling boil by low interest rates and lending standards that ranged from the careless to the downright fraudulent.
MegaThreats, his latest full-length offering, puts his Olympic-class pessimism on full display. Humankind is facing not merely four horsemen, but fully 10: an accelerating boom/bust cycle, the mother of all global debt spirals, widespread demographic decay, a worldwide addiction to the monetary heroin of central-bank-driven low interest rates, a combination of inflation and low growth (stagflation) that will make the 1970s look like a robust economy, the eclipse of the dollar by the Yuan, a Smoot-Hawley level vaporization of world trade, the attack of the AI robots, Chinese world domination, and a roasting of the planet from climate change that will trigger a wave of deadly pandemics.
Whew.
Just how good has Roubini’s track record been since the GFC? Start with the fact that in June 2009, he told a reporter for the Sunday Times of London, “I’m 95% in cash.” From the date of that interview to October 31, the S&P 500 was up 449%. Roubini writes well, and this reviewer thoroughly enjoyed his fluid prose, but following his advice would have proved detrimental to your wealth.
More substantively, Roubini conveys the distinct impression that the world has of late has become a dramatically more perilous place.
Please.
The twentieth century alone saw two cataclysmic global conflicts, worries about the economic triumph of the Soviet economic system, and the rise of Italian, German, and Japanese fascism; in October 1962, the world tottered one depth charge away from nuclear incineration, and nearly suffered the same fate from radar system glitches in the following three decades.
And as frightening and tragic as the worldwide COVID pandemic has been, it doesn’t compare to the waves of plague that engulfed the Old World after the fifth century AD. Roubini repeats the canard that modern high transport makes us more vulnerable to global pandemics. While perhaps fleetingly true in the short term, in the long run the modern pandemic burns itself out relatively quickly and with far lower mortality than in the pre-Columbian era of widely separated disease pools. Before the age of cheap and efficient long-distance transport, the world’s pathogen pools remained entirely separate, and thus featured populations utterly lacking immunity to diseases long endemic in distant lands. In the premodern world, a merchant, sailor, or rodent from a neighboring disease pool could touch off an epidemic that might kill up to 90% of a population, as occurred to the New World’s original inhabitants after the arrival of the first Europeans.
Read the full article here by William Bernstein, Advisor Perspectives.
