Roubini: Srečni, če bo samo kot ekonomska kriza v 1970-ih letih in ne kot vojna v 1940-ih

“Dr. Doom” Roubini v intervjuju v Der Spieglu o novi multi krizi zaradi desetih “mega nevarnosti” (Adam Tooze to imenuje “polikriza) pred nami, pri kateri bomo (po N. Fergusonu) “srečni, če bo samo kot ekonomska kriza v 1970-ih letih in ne kot vojna v 1940-ih“, da se bomo na zahtevo ZDA  morali odločiti ali bomo sledili ZDA ali Kitajski in da nam nihče ne garantira, da zaradi krize ne bimo volili skrajnih desničarjev. Kar je seveda šele uvod v globalno vojno.

Večina izmed nas je seveda bistveno manj pesimistična od Roubinija. Kar pa še ne pomeni, da tudi upravičeno.

Roubini: I was in Washington at the IMF meeting. The economic historian Niall Ferguson said in a speech there that we would be lucky if we got an economic crisis like in the 1970s – and not a war like in the 1940s. National security advisers were worried about NATO getting involved in the war between Russia and Ukraine and Iran and Israel being on a collision course. And just this morning, I read that the Biden administration expects China to attack Taiwan sooner rather than later. Honestly, World War III has already effectively begun, certainly in Ukraine and cyberspace.

DER SPIEGEL: Politicians seem overwhelmed by the simultaneity of many major crises. What priorities should they set?

Roubini: Of course, they must take care of Russia and Ukraine before they take care of Iran and Israel or China. But policymakers should also think about inflation and recessions, i.e. stagflation. The eurozone is already in a recession, and I think it will be long and ugly. The United Kingdom is even worse. The pandemic seems contained, but new COVID variants could emerge soon. And climate change is a slow-motion disaster that is accelerating. For each of the 10 threats I describe in my book, I can give you 10 examples that are happening as we speak today, not in the distant future. Do you want one on climate change?

DER SPIEGEL: Another threat you describe is that the U.S. could pressure Europe to limit its business relations with China in order to not endanger the U.S. military presence on the continent. How far are we from that scenario?

Roubini: It is already happening. The U.S. has just passed new regulations banning the export of semiconductors to Chinese companies for AI or quantum computing or military use. Europeans would like to continue doing business with the U.S. and China, but it won’t be possible because of national security issues. Trade, finance, technology, internet: Everything will split in two.

DER SPIEGEL: In Germany, there is a dispute right now about whether parts of the Port of Hamburg should be sold to the Chinese state-owned company Cosco. What would your advice be?

Roubini: You have to think about what the purpose of such a deal is. Germany has already made a big mistake by relying on energy from Russia. China, of course, is not going to take over German ports militarily, as it could in Asia and Africa. But the only economic argument for this kind of agreement would be that we could strike back once European factories are seized in China. Otherwise, it’s not a very smart idea.

DER SPIEGEL: You warn that Russia and China are trying to build an alternative to the dollar and the SWIFT system. But the two countries have failed so far.

Roubini: It’s not just about payment systems. China is going around the world selling subsidized 5G technologies that can be used for spying. I asked the president of an African country why he gets 5G technology from China and not from the West. He told me, we are a small country, so someone will spy on us anyway. Then, I might as well take the Chinese technology, it’s cheaper. China is growing its economic, financial and trading power in many parts of the world.

DER SPIEGEL: But will the Chinese renminbi really replace the dollar in the long run?

Roubini: It will take time, but the Chinese are good at thinking long term. They have suggested to the Saudis that they price and charge for the oil they sell them in renminbi. And they have more sophisticated payment systems than anyone else in the world. Alipay and WeChat pay are used by a billion Chinese every day for billions of transactions. In Paris, you can already shop at Louis Vuitton with WeChat pay.

DER SPIEGEL: In the 1970s, we also had an energy crisis, high inflation and stagnant growth, so-called stagflation. Are we experiencing something similar now?

Roubini: It is worse today. Back then, we didn’t have as much public and private debt as we do today. If central banks raise interest rates now to fight inflation, it will lead to the bankruptcy of many »zombie« companies, shadow banks and government institutions. Besides, the oil crisis was caused by a few geopolitical shocks then, there are more today. And just imagine the impact of a Chinese attack on Taiwan, which produces 50 percent of all semiconductors in the world, and 80 percent of the high-end ones. That would be a global shock. We depend more on semiconductors today than on oil.

DER SPIEGEL: You are very critical of central bankers and their lax monetary policy. Is there any central bank that gets it right these days?

Roubini: They are damned either way. Either they fight inflation with high policy rates and cause a hard landing for the real economy and the financial markets. Or they wimp out and blink, don’t raise rates and inflation keeps rising. I think the Fed and the ECB will blink – as the Bank of England has already done.

DER SPIEGEL: On the other hand, high inflation rates can also be helpful because they simply inflate the debt away.

Roubini: Yes, but they also make new debt more expensive. Because when inflation rises, lenders charge higher interest rates. One example: If inflation goes from 2 to 6 percent, then U.S. government bond rates will have to go from 4 to 8 percent to keep bringing the same yield; and private borrowing costs for mortgages and business loans will be even higher. This makes it much more expensive for many companies, because they have to offer much higher interest rates than government bonds, which are considered safe. We have so much debt right now that something like this could lead to a total economic, financial and monetary collapse. And we’re not even talking about hyperinflation like in the Weimar Republic, just single digit inflation.

DER SPIEGEL: The overriding risk you describe in your book is climate change. Isn’t rising debt secondary in light of the possible consequences of a climate catastrophe?

Roubini: We have to worry about everything at the same time, as all these megathreats are interconnected. One example: Right now, there is no way to significantly reduce CO2 emissions without shrinking the economy. And even though 2020 was the worst recession in 60 years, green house gas emissions only fell by 9 percent. But without strong economic growth, we will not be able to solve the debt problem. So, we have to find ways to grow without emissions.

DER SPIEGEL: Given all these parallel crises: How do you assess the chances of democracy surviving against authoritarian systems like in China or Russia?

Roubini: I am worried. Democracies are fragile when there are big shocks. There is always some macho man then who says »I will save the country« and who blames everything on the foreigners. That’s exactly what Putin did with Ukraine. Erdogan could do the same thing with Greece next year and try to create a crisis because otherwise he might lose the election. If Donald Trump runs again and loses the election, he could openly call on white supremacists to storm the Capitol this time. We could see violence and a real civil war in the U.S. In Germany, things look comparatively good for now. But what happens if things go wrong economically and people vote more for the right-wing opposition?

Vir: Der Spiegel

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