Aug 15th, 2011
Many people find Nouriel Roubini's work dry and dispassionate. You generally don't see him on television. After all, his style is more academic than political. He is certainly no hyper-partisan of the Krugman or Stiglitz mode. All that said, Roubini got a lot more attention last week than usual. In an interview with the WSJ's Simon Constable, he told it like it is in the same measured tones that have made him a less than household name.
You don't cut taxes when you go to war. The stimulus was too small. The deficit is "Bush's fault." You don't "front load" austerity in a crisis. Rather, you apply that pressure when an exit from recession is secure. Rising income inequality naturally leads to civil unrest.
However, this observation at the 5min 10sec mark sent out a shock wave:
"Karl Marx had it right. At some point, Capitalism can destroy itself. You cannot keep on shifting income from labor to Capital without having an excess capacity and a lack of aggregate demand. That's what has happened. We thought that markets worked. They're not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else's income and consumption. That's why it's a self-destructive process."
God help us. He is usually right. No one more accurately predicted the collapse of 2008.
The fact that we now have an ascendant movement in American politics which greets proven centralized monetary policy with charges of "Communism" only makes the disaster more likely.
It's all common sense... unless you are a devoted Fox viewer.