NOURIEL ROUBINI : Fasten seatbelts for a double dip

The global slowdown will accelerate in the second half - and policymakers are running out of tools

by NOURIEL ROUBINI

The global economy, artificially boosted since the recession of 2008-2009 by massive monetary and fiscal stimulus and financial bailouts, is headed towards a sharp slowdown this year as the effect of these measures wanes.

Worse yet, the fundamental excesses that fuelled the crisis - too much debt and leverage in the private sector (households, banks and other financial institutions, and even much of the corporate sector) - have not been addressed.

Private-sector deleveraging has barely begun. Moreover, there is now massive re-leveraging of the public sector in advanced economies, with huge Budget deficits and public-debt accumulation driven by automatic stabilisers, counter-cyclical Keynesian fiscal stimulus, and the immense costs of socialising the financial system's losses. (more)