Sunday, March 19, 2017

Roubini: It Is Not Going to End Well for the Economy With Trump

                                                                                        Nouriel Roubini
Keynesian economist Nouriel Roubini told CNBC at the China Development Forum on Saturday that positive emotions are dominating right now, but doom could be on the horizon.

"[Markets] are overestimating the positives of the US-Trump policies. Infrastructure, stimulus, deregulation, tax cuts: I think Trump will achieve much less on those dimensions," he said. "And they're underestimating the risk that the U.S. protectionist policies are going to lead to trade wars, that the restrictions on immigration are going to slow down labor supply, and that micromanaging the corporate sector is going to be negative."

Roubini has a point tax cuts are a plus but Trump tax cuts are going to be balanced with other tax increases, most likely some type of border tax.

A Trump economy will be about shifts and distortions. What is really driving the economy now is not Trump policies but the massive amount of money the Fed has pumped into the system since the 2008 financial crisis---and accelerating price inflation is lurking.

Roubini is correct in his final conclusion, though a bit muddied in his Keynesian view on how he gets there, in the end, this is not going to turn out well.


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