Most of the world's major economies are suffering, and that could mean big trouble, says star economist Nouriel Roubini of New York University.
"The global economy is like a jetliner that needs all of its engines operational to take off and steer clear of clouds and storms," he writes in an article for
Project Syndicate.
"Unfortunately, only one of its four engines is functioning properly: the Anglosphere (the United States and its close cousin, the United Kingdom)." The U.S. economy grew an average annualized rate of 4 percent in the last two quarters.
"The second engine — the eurozone — has now stalled after an anemic post-2008 restart," Roubini argues. The eurozone economy expanded only 0.1 percent in the second quarter from the first.
"Likewise, the third engine, Japan, is running out of fuel after a year of fiscal and monetary stimulus," he notes. Japan's economy shrank an annualized 7.1 percent in the second quarter.
"And emerging markets (the fourth engine) are slowing sharply," Roubini adds.
"So the question is whether and for how long the global economy can remain aloft on a single engine," he states.
"Weakness in the rest of the world implies a stronger dollar, which will invariably weaken U.S. growth. The deeper the slowdown in other countries and the higher the dollar rises, the less the U.S. will be able to decouple from the funk everywhere else, even if domestic demand seems robust."
Meanwhile, Nobel laureate economist
Paul Krugman writes in The New York Times that as poorly as Japan's economy has fared over the last 20 years, "the West has fallen into a slump similar to Japan's, but worse."
And what's the reason for that?
"Western policies since 2008 have been so inadequate, if not actively counterproductive, that Japan's failings seem minor in comparison," Krugman says. "And Western workers have experienced a level of suffering that Japan has managed to avoid.
"Japan used to be a cautionary tale, but the rest of us have messed up so badly that it almost looks like a role model instead," he adds.
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