Euro zone faces zero growth: Roubini

[Ed Barrow]

Source: Reuters

The euro zone is facing a period of zero growth if not recession, and the United States is heading for financial trouble, U.S. economist Nouriel Roubini was quoted as saying on Saturday.

There was a risk of renewed recession in Europe, Roubini said in an interview with Swiss daily Tages-Anzeiger.

"There is that risk, at least for the euro zone. Growth will fall toward zero. Even if that is perhaps not a real recession, it will feel like one. Greece was just the tip of the iceberg," he said.

"And the Americans too will run into the wall at some point if the carry on the way they are," he said in the interview published in German.


Read more: http://www.reuters.com/article/idUSTRE6541DW20100605

[villager]

1. what exactly was the problem with a "steady state" economy again?

Why must economies always grow, instead of merely maintain, or is it tied in to relentless human population growth, and easier ways to control the burgeoning masses?

[pattmarty]

4. I have often wondered that myself. There is always talk of "growth"........

........but why do you need it? It would seem that if a company has customers and they make a profit at the end of each year, why take a CHANCE and invest more money and sweat into growing? I can see why for huge corporations with stockholders and Wall st climbing up their asses if they don't "grow", but even then, why? I would think a company would be a lot more stable if it wasn't always trying to grow for growth's sake.

[The2ndWheel]

6. It's built in at this point

The reality we live in today exists because various organized groups of people throughout history outgrew other ones. Had more people, had better technology, could kill other quicker, could manipulate the environment at an ever deeper level, more this, better than, etc. None of the institutions that make up our civilization today could function without more people doing more things. Governments need more tax money. Corporations need more customers. People need more jobs. And all three need to spend more money individually, so that the other two can function day to day.

[Demeter]

13. To skim "Profits" off the Workers' Pay Envelopes

In steady state economy, there's no way to conceal the theft.

[The2ndWheel]

5. Same reason why societies must always progress

If they don't grow and/or progress, physical reality will catch up. That's why a steady state can't really exist. Too many variables and interactions. Too much diversity. Especially in as complex a society as we have.

[Dover]

7. Capitalism is like cancer...it must grow.

So think of a stable or prolonged recession as a remission which might eventually lead to a full recovery...the end of capitalism.

What economic model would make for a healthier environment?

[Demeter]

14. The Sustainable Economy

Has no waste, no landfills, everything is used and reused. Solar power runs it, agriculture and forestry supplies the fiber, wood, oils, etc. Dry Stone lasts forever, especially in pollution-free air.

People don't madly dash back and forth "commuting". Work and home are integrated into a sustainable community. Industry doesn't pick up and move for a few extra pennies of stolen profits, stolen from the workers.

Advertising is minimal, and so are other parasitical activities like investing, banking, etc.

Community service is mending the damage to the ecology, and everyone contributes.

[Turbineguy]

8. Growth means there might be a little

left over for the little people. A zero-sum means some will get richer while many get poorer.

[bhikkhu]

12. That's the stupid-pill we were all fed in school

The rich need growth to fuel their returns on investment; they don't give a crap whether or how you live or die beyond that.

They need excess population to drive down labor costs; they don't give a crap whether or how you live or die beyond that, as long as there's another strong back willing to do your work cheap.

[MellowDem]

15. It depends....

in the case of Europe, where there is a glut of older population with little "younger" population, it makes it hard to keep funding programs that need more and more money with fewer and fewer workers to fund them. So economic growth is necessary to keep meeting this increasing demand. Or increasing population. Or the older population will just have to settle with having less, but that is a rarity. They've earned it, so they must get it no matter the cost, or at least the thining goes.

And what happens when you have a negative economic growth is that there is less wealth. That is a dangerous thing for societies that have grown used to current standards of living and now must compete for a smaller portion of the "pie". We've seen what that can end up doing many times. And governments fear it more than anything, because it usually means they're voted out or kicked out. Which means they'll do anything possible at whatever cost (like continuously borrowing money and going deeper into debt) to keep up the same standard of living people have grown accustomed to.

What it comes down to is that people are going to have to be more flexible and less selfish. It's not necessarily fair, but it is necessary for sustainability.

[Kringle]

18. here is the problem... the 'growth myth' is needed, so people

will {foolishly} buy Greek bonds

[xchrom]

2. Not that the political leadership will listen

But we need an extraordinary jobs/main street
package.

Have needed for quite some time.

We're leaving too much to the whims of 'free marketeers'
who are proving time and again they don't know
shit from shinola.

We will become utterly degraded if we don't
realize we serious pointed direction and we need
money, wealth coming into the hands of the middle class.

[Joanne98]

3. "Growth" is a hoax. It only "grows" at the top. Investors need to get off their lazy asses and..

GET A REAL JOB!

[B Whale]

9. so true....wages for normal

people across the eurozone have flatlined for 30o years while the top 5% have explaoded. The rest have had to take on unstustainable debt to keep progressing, further blowing up house prices, lining the pockets of lenders and the...as we all now .....BOOM!

and who has to pay for all this???? oh yes, that's right, the guy and gal in the street, the poor and the people who have generally not profited at all from any opf this nonsense

[glitch]

10. If the pie is ever-increasing the hoarders don't have to lose anything for their neighbor to prosper

Growth is necessary for the hoarders. Supergrowth is necessary for superhoarders. This is why they despise sustainability so much: it spells the end to their hoardom.

Another point: growth is very energy consumptive, in any system. Much more so than a sustained state. But that makes big oil cry so we won't consider it.

[bhikkhu]

11. This far into overshoot, zero growth is a good sign

We should do as well here...

[laurel46]

16. By law, a CEO is required to make money, the maximum amount

a CEO can. Why don't we ask our CEO to follow the same rules of competition, after all, that's capitalism. Taxing the wealthy is legal, legal, legal, and a great way to make money, so Mr. President, capitalize as much as you can for your shareholders. For those who claim it's unfair, or redistribution, or whatever, I say, "we are capitalists remember? If we don't go after the corps as relentlessly as they do to us, we are being bad at business and that's not good for America.

Honestly, we are going to have to restructure the debt as has been done over the last 350 years that this wealth gap has happened. If the rich don;t pay the taxes, their future is rather grim, according to history. I wouldn't mind one thing about the economy collapsing and that is seeing the wealthy just lose power. No taxes, and congress if frozen. Banks can't pay police or military, so keep your homes mortgage free. We might have to grow food and work hard, but to see the master of the universe suddenly have no power.....ah.

[TomCADem]

17. Key Point - "If governments implement austerity measures too soon...

"If governments implement austerity measures too soon they risk snuffing out demand and recovery, but delays could provoke a catastrophe with high interest burdens and inflation.

"You're damned if you save and you're damned if you don't," he said.

Roubini said it was "possible to square this circle" if governments committed to a credible medium-term plan to restore their budgets.

But such policies, which carry the risk of a deflationary recession, must be compensated for with a loose pan-European monetary policy to stimulate demand."

I think the Obama administration has been trying to strike this balance that Roubini is referring to. Whether they hit it right, is an open guess. Still, its better than the GOP alternative.

[Change Happens]

19. He will be proven wrong....He is getting on my nerves with his stupid predictions!

He missed the whole 70% move up last year. I am not saying it is about the stock market...etc. It is important to note that 70% move made up of real money, invested by real people who thought otherwise.

[Imajika]

20. Overspending and way too much debt...

Europe and the US have all spent way more than we have and taken on much too much debt. Without economic expansion we have no way to grow our way out the hole we are in. The good times, fueled by spending the next few generations money, will have to end.

And for those that don't understand why we have to grow, think of it this way: As a college student you take on $5000 in credit card debt and it seems like an enormous amount, but as you "grow" and make more money that amount of debt is much more manageable. What were once insanely high interest payments and fees (debt servicing) are now a smaller percentage of what you owe due to the fact you make so much more money as you advance in your career.

If a societies population is increasing, the economy has to grow in order to provide the additional jobs to the expanding number of people whom should be entering the workforce. Also, if a society has promised a large amount of money/pensions and benefits to retirees, and a bubble of an unusually high amount of said retirees is on the horizon, economic expansion is necessary to pay those benefits or it becomes necessary to either slash those promised benefits or tax those whom remain in the workforce further - neither are particularly good options.

It is disturbing to read so much ignorance on this thread. The delusion that a 0 growth society is somehow a good idea is pure fantasy.

We have spent far too much and just reached the breaking point when it comes to debt. As long as our economy is growing at a reasonably good clip, we can put off much of the pain of massive cuts or tax increases for awhile longer. If our economy does not grow we will have to pay the proverbial piper now. The stimulus programs enacted in the US and some other nations seem to have boosted the economies for a few quarters, but it is looking more and more like they have failed to really kickstart economies in a lasting manner that might have provided long term growth. The latest job numbers in the US are a good indication of this and the market understood that well.