The economist fabled to have predicted the global financial crisis shoots from the hip on European recovery -- and describes a still-dire bill of economic health for the Old Continent. Nouriel Roubini, professor at New York University, dubs the European condition a "hangover" and one sure to continue galling livers for a good while to come.
The professor employs a host of disparaging idioms in his take on the EU's present status, decrying 1) the policies that "stole demand from the future," 2) the laughable "stress tests" (quote marks his) that only "kicked the can down the road," and 3) the lingering "fundamental problems of the eurozone." He singles out sitting EU president and Belgian head of state Yves Leterme as "unable to keep his own country together, let alone unite Europe."
He also dismisses the notion that the EU bail-out created anything beyond transient relief. Though Brussels policy heads managed in May to slap together a rescue fund, risk spreads have returned to their pre-bail-out levels for several European countries. Roubini sniffs that operatives "fudged" this summer's round of financial "stress tests" for European markets, serving to pep up world markets' frail confidence only temporarily -- a move that is already beginning to wear thin.
Even the sunniest eurozone example, Germany, suffers Roubini's ire, and he shrugs off that country's supposed promise as the EU's post-crisis front-runner:
"Even Germany’s temporary success is riddled with caveats. During the 2008-2009 financial crisis, GDP fell much more in Germany – because of its dependence on collapsing global trade – than in the United States. A transitory rebound from such a hard fall is not surprising, and German output remains below pre-crisis levels."
In what may bear nightmarish implications, the "double dip" recession so feared throughout the world may actually be taking root as we read his words.
"Indeed, the latest data from Germany – declining exports, falling factory orders, anemic industrial-production growth, and a slide in investors’ confidence – suggest that the [double dip] has started."
His forecast on current and future European politics provides little sustenance for optimists. He cites a litany of bummer political events ranging from Angela Merkel's recent shallacking in German regional elections, to unlikely odds that Sarkozy will initiate real (Roubini says "cosmetic") structural reforms in France -- and that is concurrent with sobering competition prospects from the Socialist Party's presidential likely, one Dominique Strauss-Kahn. Similarly unpopular leaders also face grim predictions across the EU's southern belt, from the vulnerable Presidents Silvio Berlusconi (Italy) and Jose Luis Rodriguez Zapatero (Spain), to the bete noire of EU fiscal cohesion, George Papandreou (Greece).
If all that wasn't enough, Roubini finishes by going for broke on two scenarios for the eurozone's future. The first, the "best" case scenario (though hardly a good one) says the monetary bloc limps on some years longer. The second -- this is the 800-pound gorilla whose presence EU public officials from across the 27 states refuse to entertain -- predicts that "the eurozone will break up, owing to a combination of sovereign debt restructurings and exits by some weaker economies."