The second act in the fear of “the USA is running towards recession” that surrounds the global markets: After the World Bank, IMF, Deloitte and Bank of America, “Dr. Nouriel Roubini, nicknamed “The Apocalypse”, also issued a recession warning.
The US economist, who is known as the crisis prophet because he predicted the 2008 banking crisis, said, “The USA is heading towards a credit crunch that will drag the economy into recession.” “The turmoil that has hit the US banking industry will only get worse,” the New York University professor told Fox Business channel.
Roubini pointed out that the country is facing massive deposit outflows as worried customers withdraw their money after the collapse of Silicon Valley Bank, the 16th largest US bank, and drew attention to smaller regional banks in the lending country. Many believe these banks will make it harder for consumers and businesses to get loans, given the lack of trust and pressure on deposits. This is called the “credit crunch”.
“I think the problem is with regional banks,” Roubini said. “Regional banks are major lenders to households for mortgages, small businesses, SMEs and commercial real estate. And so we will have a credit crisis.”
“This credit crunch makes a recession – a hard landing – much more likely than ever before. So we are facing a serious credit crunch for much of the US banking system.” Underlining that the US Federal Reserve (Fed) and other central banks are facing a dilemma, “Dr. Apocalypse,” “The worst awaits us.
“They have to achieve price stability, sustain economic growth and avoid recession and maintain financial stability,” he said. Pointing out that interest rates should increase even more because inflation is still well above the target, Roubini said, “This will cause a hard landing in the economy.” Born in Istanbul in 1958, Roubini completed his international economics education at Harvard University and received his doctorate from the same university.