The Unassuming Economist

“We’ve reached a stall speed in the economy, not just in the U.S., but in the euro zone and the UK. We see probably a 60 percent probability of recession next year, and, unfortunately, we’re running out of policy tools. Every country is doing fiscal austerity, and there will be a fiscal drag. The ability to backstop the banks is now impossible because of political constraints, and sovereigns cannot bail out their own distressed banks because they are distressed themselves,”

September 2006 (IMF)
“my view is that the risk of a hard landing is very high for the U.S. economy. I see essentially a recession coming by next year. I give it a very high likelihood. I argue that housing today, like the tech bust in 2000-2001 will have a macro effect; it is not going to be just a sectoral effect. I argue that U.S. consumers are now close to a ‘tipping over’ point given all the vulnerabilities I have discussed. I argue that the Fed easing will occur, so the next move is going to be a cut, but it is not going to prevent a recession. And, finally, I argue that the rest of the world is not going to be able to decouple from the U.S. even if it is not going to experience an outright recession like the United States. So on that cheerful note, I will stop.”