Nouriel Roubini on Belgium

  

Nouriel Roubini in our newsroom

Last night Nouriel Roubini, the famous Cassandra of Columbia University, visited De Tijd and L'Echo to give a lecture on the future of capitalism. He also made an assessment of Belgian economy and politics. It goes like this:

According to Roubini, Belgium isn't Greece.

1. Government debt is very high, but not as high as in Greece.
2. The budget deficit is significant, but not as dramatic as in Greece.
3. The Belgian economy has lost competitiveness, but not thàt much, said Roubini.
4. There are important trade ties with Germany, the engine of the Eurozone.
5. The Belgian families save money (and have no debt problems).
6. And the current account is far more better than in Greece.

If there is one thing that has to change, it is this: Belgium needs a stable government.

The other remedies Belgium needs, apply to the whole of the eurozone as well. Roubini said the eurozone will have to combine austerity with growth, which isn't an easy task. In order to achieve it, the ECB has to lower its rates and use quantitative easing. European countries that do quite well, such as Germany, need to make an effort to stimulate their domestic market, in order to improve demand. And the euro should drop below parity with the dollar, which will compensate part of the European competitiveness problem and stimulate export.

But it won't be a walk in the park. If monetary and budget stimulus is halted too early, a double dip could occur, Roubini said. If it is kept too long, it could create uncontrollable government debt and high inflation, which could create a recession as well. Searching for the exit? You'll be damned if you do and damned if you don't, Roubini said.

But let's stick with the good news: Belgium isn't Greece. Paul Krugman said that a year ago, Belgian Affairs agreed with it earlier this year and now Roubini confirms. Mind though, that he didn't agree fully with Paul Krugman. Roubini thinks Krugman underestimates the dangers of high government debts in the long run. Roubini is more pessimistic on that issue. But then again, if your nickname is Dr. Doom, you have to live up to expectations.

Bart Haeck

Comments

[Reactie van TrevinoKellie]

If you want to buy a house, you would have to receive the mortgage loans. Furthermore, my mother all the time uses a credit loan, which is the most rapid.

[Reactie van Stijn Van Nieuwerburgh]

Roubini is at New york University, not Columbia University