Top Business News
Nouriel Roubini: We’re entering new recession, issue is how deep
Michael Babad | Columnist profile | E-mail
Globe and Mail Update
Published Thursday, Sep. 15, 2011 12:07PM EDT
Last updated Thursday, Sep. 15, 2011 12:37PM EDT
5 comments Email Print/License Decrease text size
Increase text size These are stories Report on Business is following Thursday, Sept. 15. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Follow Michael Babad and Globe top business news on Twitter
Three years on
It was three years ago today that Lehman Bros. collapsed, spinning the world into a crisis the likes of which had not been seen in decades. Three years later, any respite appears to have been brief.
Video
Real estate over stocks The U.S. economy remains weak, and is likely to drag Canada with it. In Europe, the recovery is grinding to a halt as austerity measures meant to solve the continent's debt troubles help cripple the economy. There are riots in the streets of many European cities. Foreclosures are rising in the United States, where one in six is impoverished. Long-term unemployment is a blight the world over, with almost 1.4 million people out of work in Canada alone and warnings today from the OECD that governments need to act.
On this, the third anniversary of the death of Lehman, the European Commission warned that the economies of the 17-member euro zone are stalling, with growth in the third quarter of 0.2 per cent giving way to 0.1 per cent in the final three months of the year.
“This requires steadfast continuation of the strategy of differentiated, growth-friendly fiscal consolidation and the implementation of the decisions to support financial stability,†said Oli Rehn, the EU monetary affairs commissioner.
And therein lies the problem: "Growth-friendly fiscal consolidation" is oft-stated and oft-ignored as politicians and markets demand ever greater cutbacks to help cope with swollen debts in countries such as Greece, Italy, Ireland and Portugal.
Getting people back to work is proving ever more difficult as governments trim their public services and companies lack the confidence to hire amid such global uncertainty.
Indeed, the Organization for Economic Co-ordination and Development that growth in labour markets will remain weak. In Canada, The Globe and Mail's Tavia Grant reports, the jobs market is in better shape than those of many other countries, but young people and workers with lesser skills are still in trouble.
Just today, the U.S. Labor Department reported that first-time claims for jobless benefits climbed last week by 11,000, hitting 428,000 or the highest in about two months. That was much worse than expected.
Some of today's numbers are troubling, and the co-ordinated action of five major central banks this morning illustrate the angst of the markets.
Toronto-Dominion Bank and others peg the chance of another recession at 40 per cent.
Nouriel Roubini, the New York University professor who forecast the financial crisis, went further today, warning that "we are entering a recession." The question isn't whether there will be a double-dip, he said on Twitter, but rather how deep it will be.
And the answer, added the chairman and co-founder of Roubini Global Economics, depends on the response of policy makers and developments in the euro zone's ongoing crisis.
