When Recession Comes, Expect Central Banks to Rewrite the Rules
— October 29, 2019
By Nouriel Roubini
Still, some of these risks could become less likely over time. The US and China have reached a tentative agreement on a “phase one” partial trade deal, and the US has suspended tariffs that were due to come into effect on 15 October. If the negotiations continue, damaging tariffs on Chinese consumer goods scheduled for 15 December could also be postponed or suspended. The US has also so far refrained from responding directly to Iran’s alleged downing of a US drone and attack on Saudi oil facilities in recent months. The US president, Donald Trump, doubtless is aware that a spike in oil prices stemming from a military conflict would seriously damage his re-election prospects next November.
The UK and the EU have reached a tentative agreement for a “soft” Brexit, and the UK parliament has taken steps at least to prevent a no-deal departure from the EU. But the saga will continue, most likely with another extension of the Brexit deadline and a general election at some point. Finally, in Argentina, assuming that the new government and the IMF already recognise that they need each other, the threat of mutual assured destruction could lead to a compromise.
Read the full article in The Guardian.
Nouriel Roubini is a Professor of Economics and International Business and the Robert Stansky Research Faculty Fellow.