Not only do we have to resemble the grumpy dwarf of Snow White, we also have to recognize that Professor Nouriel Roubini, also known as Doctor Boom or Doctor Catastrophe, is very accurate in his predictions. Humans have a great nose to recognize storms. For starters, he was one of the few economists who surprisingly warned us of the 2008 financial crisis. And in 2019, he kept saying that a major economic crisis would start in 2020. Of course, he never spoke of the corona virus. That would be too much to ask. According to him, however, this crisis was inevitable. But we already have the crisis with us. Already arrived. What does Doctor Doom tell us now?
Doctor Catastrophe recognizes his nickname and only sees a catastrophe in the future. Professor Nouriel Roubini is a leading Jewish-Iranian economist, although he was born in Turkey and became famous during the 2008 crisis for his accurate predictions and strong arguments. The press loves him because the teacher is a character. It looks like something from a comic. Obviously, he’s a brilliant economist. But it is his serious and somber character that draws his attention to his media interventions. He is so pessimistic that sometimes it’s funny.
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I honestly think that Professor Roubini has never smiled in his life. She is always seen with wrinkled and crooked lips. It looks like he swallowed a lemon. The words come out of his mouth like bullets from a machine gun. It always sounds annoying, outraged and fed up with life. With a gray cloud on top. It lies on your crown and reads the primer for the last time. It’s a mix of Dr. Chapatín and J.J. Jameson, the head of Peter Parker, but without a mustache and in an Iranian version. This is Doctor Doom, like Heidi’s grandfather.
Doctor Doom is, of course, about this Tasmanian devil having a crystal ball. Something that worries because he always talks about disasters and depression. It is extremely negative and you don’t want to believe him. But it’s kind of a walking Murphy law. I mean, if Doctor Doom says it and it is terrible, it will probably come true. Damn it, professor!
The teacher even speaks on the elbows and tells us very clearly all the evils that lie ahead. One might think that the teacher who is a great pessimist tends to a type W crisis rather than a V that many are waiting for, or maybe a U. But unfortunately it is never that easy for him. Of course, he expects an L-type crisis. In other words, we fall into the well and will be there for a long and painful decade. And he calls it nothing more and nothing less than “THE GREATEST DEPRESSION”.
Interestingly, his predictions are based on arguments that are almost identical to those of Ray Dalio, the hedge fund guru, who also speaks of a “lost decade”.. And it all starts with a significant reduction in spending and a forced increase in savings. This naturally lowers demand and creates a deflationary picture. Layoffs go viral due to lack of income. And everything increases in a process that is reported back like a big snowball.
According to Doctor Doom Wall Street is “delusional” and they are like “zombies” that are attracted to the charms of the United States Federal Reserve. These stimuli are necessary in the short term to stop deflation, but they are not a panacea. Big companies have more capacity because their mattresses are bigger and because Uncle Sam doesn’t let them die. However, the reality of small and medium-sized companies is very different. The big problem is the amount of debt. The deficit and the national debt, of course. But also private debts. This is a weight for everyone in the private sector and will certainly have an impact on income.
On the one hand, we have millions of unemployed. The unemployment rate has improved somewhat since its sharp decline in April, but these data do not mention the quality of these new jobs. Because many of the companies that fired their employees in April call their employees back, but many of them offer much less.. And while these new jobs officially improve the unemployment rate because they’re bad jobs, they also spur spending.
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The low-income, gigantic debt scenario is therefore not very promising for the corporate sector. That will of course affect the basics. And with it the reviews of the companies. Stimuli help, but they don’t solve everything. Especially since we are in the process of deglobalization. And that will be inflationary. This implies that this crisis could move from a deflationary crisis to a stagflation crisis. This means, a crisis in Latin America.
First world crises are often deflationary. In other words, prices are falling and unemployment is rising. Deflation crises respond very well to liquidity injections from central banks because there is an effective production apparatus that responds positively to liquidity. However, Crises in Latin America tend to be different.
These usually show economic stagnation, an increase in unemployment and price increases. Stagflation. And this happens because central banks print money without taking real production into account in the real economy. Everyone is usually motivated by politics and demagogy. I mean, inorganic money is fresh grass for Papa Staat.
Production without money is deflation. Money without production is inflation. And money with production is growth.
New economic nationalism and geopolitical tensions could devastate the global economic scene. Production costs will rise significantly if everyone flees to their fiefdoms and a wave of protectionism begins. When factories come back and we stop buying everything in China to buy it at home, we have to understand that it comes at a cost. Homemade products are more expensive. If we reduce imports by closing our ports, the decline in external supply will lead to inflation. Printing money is no longer as effective as it is now. The United States, for example, without imports and without immigrants. How do you hope to increase your company income?
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However, What does all this mean for us kryptonates? Won’t we see life in 10 years? Suppose Doctor Doom is correct. I honestly think we’ll be fine. And that’s not a delusion, because all my eggs are in the crypto basket. While Bitcoin was correlated with the SP 500 during this crisis, I never believed Bitcoin was a safe haven like gold, but I consider myself a chain optimist for its future.
Although I personally take refuge in it, when I say that it is not a safe haven, I refer specifically to its short-term volatility. Something I don’t get. It’s a fact. This volatility doesn’t bother me because I am long-term. Bitcoin may not be a safe haven. That is, a mouse in its stone cave trembles with fear like gold brooms.
But it is a lion. In other words, a wild, chaotic, fleeting and brave animal. An oasis of growth. In the long run, he trusted his uncorrelated character. This means, It will be ambidextrous. The S P 500 sometimes goes up and down. But sometimes not. It will not be a copy and will generally go its own way. I agree with Doctor Doom very much, but I don’t wrinkle my face like him. Happiness always rewards the patient.